ii.iti##. 


I  'I'll  i'!|!tl!ifl      !i 


SGOTT  HEARING 


ANTHRACITE 

An  Instance  of  Natural 
Resource    Monopoly 


By 
SCOTT  NEARING,  Ph.D. 

University  of  Toledo 

Author  of 

"Wages  in  the  United  States,"  "Financing  the 

Wage  Earner's  Family,"  "Reducing  the 

Cost  of  Living,"  "Income,"  etc. 


THE  JOHN  C.  WINSTON  COMPANY 
Philadelphia 


Copyright,  1915,  by 
The  John  C.  Winston  Company 


Hi) 


DEDICATED 

To  an  order  of  life  in  which  the  chief  aim 
will  be  happy  and  noble  human  beings. 


>  /ii  <^oQr^ 


CONTENTS 

CHAPTER  1 
Monopoly  on  Trial  page 

1.  The  Nature  of  Monopoly 17 

2.  Anthracite  Ownership  Means  Monopoly     .        .        .21 

3.  Monopoly  Through  Concentration  of  Ownership       .  23 

4.  Competition,  the  Life  of  Trade 24 

5.  The  Growth  of  Co-operation  and  Combination .        .  26 

6.  Will  Monopoly  Work? 29 

7.  Ownership  as  Opporttmity 31 

8.  The  Fruits  of  Ownership 33 

9.  Every  System  Must  Produce  Results  ....  36 
10.  Has  Monopoly  Succeeded? 38 

CHAPTER  2 
The  Anthracite  Problem 

1.  The  Parties  at  Interest 42 

2.  The  Use  of  Anthracite 43 

3.  The  Supply  of  Anthracite 46 

4.  The  Basis  for  Anthracite  Monopoly     ....  49 

5.  Unsuccessful  Combinations 50 

6.  An  Effective  Anthracite  Combination         ...  54 

7.  RaOroad  Unity 58 

8.  Coal-Mine  Control 60 

9.  The  Anthracite  Problem 63 

CHAPTER  3 
The  Consumer  and  Anthracite  Prices 

1.  The  Consiuner's  Point  of  View 65 

2.  The  Status  of  the  Consumer 66 

3.  The  Rights  of  Consumers 69 

4.  The  Obligations  of  Consumers 70 

(5) 


CONTENTS 


/ 


5.  Reasonable  Prices    . 

6.  Methods  of  Making  Prices 

7.  Business  for  Profits 

8.  Business  for  Service 

9.  Prices  and  Earning  Power 

10.  The  Monopoly  Principle  and  Anthracite 

11.  Recent  Movements  of  Anthracite  Prices 

12.  The  Cost  of  Producing  Anthracite 

13.  The  Cost  of  Getting  Coal  to  Market   . 

14.  A  Better  Explanation      .... 

15.  What  Should  the  Consumer  Pay  for  Anthracite? 


PAGE 

72 
74 
76 
79 
82 
84 
85 
87 
92 
93 
94 


CHAPTER  4 
The  Wages  of  the  Anthracite  Workers 

1.  The  Economic  Status  of  Anthracite  Labor         .        .     97 

2.  Anthracite  Risks 103 

3.  Anthracite  Wages  and  Wages  in  other  Industries      .    107 

4.  Anthracite  Wages  and  the  Labor  Market   .        .        .110 

5.  The  Adequacy  of  Anthracite  Wages     .        .        .        .112 

6.  The  Anthracite  Wage  Scale 115 

7.  The  Anthracite  Wage  and  Physical  Efficiency   .        .118 

8.  The  Anthracite  Wage  as  a  Business  Proposition        .    128 

9.  The  Anti-Social  Nature  of  the  Anthracite  Wage        .    137 

10.  The  Anthracite  Wage  and  the  Increased  Cost  of 

Living 141 

11.  A  Fair  Anthracite  Wage 152 


CHAPTER  5 
The  Profits  of  the  Operators 

1.  The  Era  of  Small  Profits 

2.  Making  Anthracite  Profitable 


3.  Anthracite  Profits  and  Railroad  Profits 

4.  Anthracite  Prosperity     .... 

5.  Are  Anthracite  Profits  too  High? 


153 
156 
161 
167 
170 


CONTENTS  7 

CHAPTER  6 
Concrete  Example — The  Conflict  of  1912  page 

1.  The  Apparent  Advantage  of  the  Operators         .        .178 

2.  A  Typical  Situation 181 

3.  The  Consumer  in  1912 184 

4.  The  Worker  in  1912 188 

5.  The  Operators  in  1912 190 

6.  Some  Lessons  From  the  1912  Experience    .       .       .194 


CHAPTER  7 
An  Object  Lesson  in  Monopoly 

1.  The  Anthracite  Lesson 

2.  The  Losers  and  the  Gainers  from  Monopoly 

3.  The  Larger  Menace  of  Monopoly 

4.  The  Economic  Effects  of  Monopoly 

5.  The  Social  Effects  of  Monopoly    . 

6.  Monopoly  Denies  Opportunity 

7.  The  Political  Effects  of  Monopoly 

8.  Anthracite  and  the  Government  . 

9.  The  Enemy  Within  the  Gates 


196 
199> 
200. 
201 

2or 

214 
216 

221 
224 


CHAPTER  8 
The  Future  of  Anthracite 

1.  The  Conflicting  Anthracite  Interests 

2.  The  Coal  Owners  Would  Stand  Pat 

3.  The  Future  for  the  Workers  . 

4.  The  Consumers  and  the  Future    . 

5.  Winners  and  Losers 


rH'i-'^  • 


227 
230 
231 
235 
241 


APPENDIX 

Shipments  of  Anthracite 243 

Employees,  Working  Time  and  Tonnage        ....   244 


Index 245 


PREFACE 

During  these  years  of  spectacular  military  con- 
flict, it  is  easy  to  forget  the  increasing  economic 
turmoil  that  is  interwoven  with  present-day  exist- 
ence. Economic  issues  arise  on  every  hand. 
Capital  and  labor,  wages,  the  cost  of  living, 
unemployment — these  things  are  a  source  {  of 
endless  social  disruption. 

Economic  issues  may  be  considered  in  the 
large.  They  possess  equal  potency  in  individual 
cases,  just  as  the  drop  of  water  contains  the 
qualities  of  the  ocean.  Furthermore,  the  individ- 
ual instance  is  more  easily  studied,  its  char- 
acteristics are  more  readily  comprehended,  and 
the  proper  method  of  treatment  more  safely 
prescribed.  Moreover,  it  is  highly  probable  that 
the  deductions  which  may  be  drawn  from  the 
economic  conditions  surrounding  one  specific 
problem  are  in  large  measure  applicable  to  the 
similar  problems  elsewhere. 

Some  satisfactory  method  of  studying  economic 
problems  must  be  devised.  Dogma  will  not  stand 
the  test  of  experiment.  Preconceptions  and 
tradition  fall  by  the  wayside.  Meanwhile  the 
world  must  know! 

Knowledge  is  the  only  weapon  that  will  ever 
overcome  the  host  of  difficulties  arising  out  of  the 
stress  of  modern  life.  Knowledge  must  therefore 
be  the  keynote  of  social  endeavor. 

(9) 


10  PREFACE 

Knowledge  must  be  spread  through  the  land. 
At  one  time  it  will  be  propagated  by  means  of  a 
broad  hypothesis  like  that  of  Darwin  or  Marx. 
At  another,  many  persons,  working  each  in  his 
own  field,  will  produce  atoms  of  information, 
which,  aggregated,  will  constitute  the  basis  for 
still  further  advance. 

This  little  book  is  not  a  general  study.  It  does 
not  aim  to  set  forth  any  new  hypotheses.  It  aims 
to  explain  some  of  the  more  important  phases  of 
modem  economic  life  as  they  apply  to  one  indus- 
try, localized  in  one  corner  of  one  state.  It  is 
written  with  the  hope  that  the  propositions  that 
hold  true  for  the  anthracite  industry  may  be 
found  to  hold,  with  equal  truth,  for  other  natural 
resource  monopolies. 


A  BRIEF  SUMMARY  OF  THE 
ARGUMENT 

Chapter  1.     Monopoly  on  Trial 

Monopoly  is  on  trial  in  the  United  States.  The 
eariy  colonists  established  a  system  of  property 
ownership  under  which  the  natural  resources — 
fertile  land,  timber,  minerals,  water  power,  and 
all  of  the  gifts  of  nature  except  harbors  and 
navigable  waterways — might  be  owned  by  private 
individuals.  Under  the  system  of  private  owner- 
ship of  natural  resources  most  of  the  valuable 
parts  of  the  earth's  surface  have  passed  into  the 
hands  of  a  comparatively  small  number  of  people. 
The  owners,  by  virtue  of  their  ownership  of  these 
particularly  desirable  parts  of  the  earth's  surface, 
are  enabled  to  collect  returns  for  the  use  of  their 
properties. 

The  system  of  private  ownership  of  natural 
resources  may  succeed  or  it  may  fail.  Its  fate 
depends,  in  the  long  run,  on  the  effect  which  it 
has  on  the  well-being  of  the  masses  of  mankind. 
Three  centuries  of  property  relations,  tmder  which 
any  man  who  could  buy  it  might  place  a  "no 
trespassing"  sign  upon  as  much  of  the  earth  as  he 
could  afford  to  buy,  has  made  a  few  people  the 
owners  of  the  earth. 

Chapter  2.     The  Anthracite  Problem 

The  anthracite  coal  fields  present  an  excellent 
illustration  of  the  ultimate  effects  of  the  private 

(11) 


12  SUMMARY 

ownership  of  natural  resources.  The  anthracite 
product  has  a  broad,  general  market ;  the  anthra- 
cite field  is  limited  in  extent  and  localized  in  one 
small  area,  the  ownership  of  the  field  has  been 
concentrated  in  a  very  few  hands.  Millions  of 
consumers  depend  upon  anthracite  for  fuel; 
hundreds  of  thousands  of  families  depend  upon  the 
industry  for  a  livelihood.  The  way  in  which  the 
consumers  and  the  workers  fare  at  the  hands  of 
this  private  resource  monopoly  may  give  many  a 
valuable  hint  regarding  the  way  in  which  con- 
sumers and  workers  may  expect  to  fare  at  the 
hands  of  other  natural  resource  monopolies. 

Chapter  3.     The  Consumer  and  Anthracite  Prices 

The  consumer  is  called  upon  to  pay  a  price  for 
coal  which  represents,  not  the  cost  of  producing 
the  coal,  but  a  monopoly  price  based  on  the  prin- 
ciple of  "all  that  the  traffic  will  bear."  The 
monopoHst,  in  other  words,  charges  all  that  he 
can  for  his  product,  his  aim  being,  not  low  prices 
but  high  profits.  When  the  cost  of  producing 
anthracite  increases,  the  consumer  is  promptly 
saddled  with  an  additional  burden.  The  facts 
show  clearly  that  the  consumer  of  anthracite  pays 
all  of  the  costs  of  production  plus  a  handsome 
monopoly  profit  to  the  owners  of  the  resource. 

Chapter  4-     The  Wages  of  the  Anthracite  Workers 

The  anthracite  workers  fare  no  better  than  the 
workers  in  any  other  large  American  industry 
giving  employment  to  men  of  a  similar  grade  of 


SUMMARY  13 

skill  and  intelligence.  Indeed,  when  the  risks 
involved  in  mining  are  taken  into  account,  the 
anthracite  miner  is  often  worse  paid  than  em- 
ployees doing  similar  work  in  other  industries. 
Many  of  the  workers  in  the  anthracite  field  receive 
a  wage  which  will  not  buy  a  decent  living  for  a 
family  of  ordinary  size.  Furthermore,  the  wage 
of  the  miners  in  recent  years  has  failed  to  rise  as 
rapidly  as  the  cost  of  living.  Consequently  the 
income  will  not  go  as  far  now  as  it  did  in  1903. 
Certainly  the  miners  are  receiving  no  share  of  the 
heavy  monopoly  toll  taken  from  the  consumer. 

Chapter  5.     The  Profits  oj  the  Operators 

Meanwhile  the  owners  of  the  anthracite  region 
have  been  making  profits  that  are  generous  in  the 
extreme.  Measured  in  terms  of  earnings,  of  divi- 
dends, or  of  surpluses,  the  anthracite  interests 
are  reaping  the  full  benefits  of  their  monopoly 
control.  The  prosperity  of  the  anthracite  owners 
has  been  particularly  noticeable  since  the  forma- 
tion of  the  effective  combination  of  1898. 

Chapter  6.     A  Concrete  Example — The  Conflict  of 
1912 

The  anthracite  situation  is  well  illustrated  by 
the  events  surrounding  the  strike  of  1912.  The 
workers  gained  a  net  increase  of  about  five  per  cent 
in  wages;  this  raised  the  labor  costs  of  the  coal 
slightly,  and  the  operators  promptly  added  twenty- 
five  cents  to  the  price  of  each  ton.  The  increase  in 
wages  was  used  as  a  pretext  to  saddle  additional 


14  SUMMARY 

burdens  on  the  consumers.  The  operators  made 
milHons  by  the  transaction.  This  situation 
brought  out  clearly  the  rule  that  seems  to  hold  true 
of  this  natural  resource  monopoly — the  workers' 
gains  are  slight,  the  operators'  gains  are  immense 
and  the  consumers  foot  the  bill. 

Chapter  7.     An  Object  Lesson  in  Monopoly 

The  extra  burdens  on  the  consumer,  the  indif- 
ferent position  of  the  worker  and  the  huge  returns 
to  those  who  control  the  monopoly,  seem  to 
represent  with  some  degree  of  accuracy  the  situa- 
tion that  the  American  people  will  face  with  all 
of  the  natural  resource  monopolies.  The  m^ani- 
fold  effects  of  the  anthracite  monopoly  power 
upon  the  consumers,  the  workers,  and  the  eco- 
nomic, social  and  political  organizations  of  the 
community  are  due,  not  to  the  fact  that  the 
monopolists  control  anthracite,  but  to  the  fact 
that  they  have  a  monopoly.  Wherever  it  appears, 
monopoly  leads  to  certain  well-defined  ends  that 
are  evidently  in  conflict  with  the  best  interests 
of  society. 

Chapter  8.     The  Future  of  Anthracite 

The  consumers,  the  workers  and  the  owners 
have  an  interest  in  the  anthracite  fields.  So  long 
as  the  private  monopoly  of  natural  resources  is 
permitted,  the  consumers  will  be  called  upon  to 
foot  the  bill.  Under  the  present  system  of  natural 
resource  ownership  they  get  their  fuel  at  an 
unnecessarily    high    figure.      The    worker    need 


SUMMARY  15 

expect  no  better  treatment  from  a  monopolized 
industry  than  he  expects  from  a  highly  competi- 
tive industry.  Indeed,  where  a  monopoly  is 
powerful  enough  to  control  the  political  machinery 
as  well  as  the  industrial  machinery,  the  worker 
may  fare  worse  under  a  monopolized  than  he 
would  fare  under  a  competitive  industry.  The 
real  gainers  under  the  present  system  of  private 
monopoly  of  natural  resources  are  the  monopo- 
lists themselves.  They  have  nothing  to  lose  and  a 
very  great  deal  to  win  from  the  continuance  of 
the  present  system  of  resource  ownership.  Of 
the  three  parties  at  interest,  the  monopolists  and 
they  alone  will  be  benefited  economically  by  a  con- 
tinuance of  the  present  system  in  the  anthracite 
coal  fields. 


CHAPTER   1 

MONOPOLY   ON   TRIAL 

1 .  The  Nature  of  Monopoly 

The  owners  of  the  anthracite  coal  fields  are 
monopolists  in  two  senses :  First,  they  are  monop- 
olists because  they  own  the  coal-bearing  land. 
Second,  they  are  monopolists  because  they  have 
concentrated  the  ownership  of  the  important 
anthracite  deposits  in  a  comparatively  few  hands. 

Economists  have  agreed  to  define  monopoly  as 
a  control  sufficiently  great  to  fix  a  price  above  the 
competitive  level.  Thus,  for  example,  if  five  men 
are  spinning  cotton  yarn  and  selling  their  product 
in  the  same  market,  each  one  of  the  men  will 
naturally  try  to  out-do  the  other,  either  by 
furnishing  a  superior  quaHty  or  by  selling  at  a 
lower  price.  The  price  of  the  yam  under  this 
free  competition  will  be  lowered  to  a  point  at 
which  the  spinner  who  is  producing  at  the  great- 
est cost  is  getting  a  return  for — 

1.  The    cost    of    running    the   business, 

including  raw  materials,  tools,  hous- 
ing and  the  like. 

2.  Wages  for  himself  as  a  worker. 

3.  A  fair  profit  on  his  investment  and  for 

the  risk  which  he  incurs  in  carry- 
ing on  the  business. 

2  (17) 


18  ANTHRACITE 

A  price  including  these  items  is  called  a  "cost 
price"  because  it  represents  the  actual  costs  of 
production,  including  a  fair  profit. 

Free  competition  makes  cost  prices.  The 
existence  of  cost  prices  is  proof  of  the  freedom 
of  competition. 

One  of  the  five  yarn  spinners,  who  is  producing 
more  cheaply  than  his  fellows,  may  decide  to 
lower  prices.  He  has  certain  efficiency  devices 
that  enable  him  to  do  this  and  at  the  same  time 
to  secure  a  reasonable  profit  on  his  business. 
Prices  go  down,  and  the  four  competitors  who  are 
spinning  yarn  under  greater  costs  can  no  longer 
earn  profits.  If  the  situation  continues,  the 
competitors  will  be  forced  out  of  business,  since 
prices  cannot  exist  permanently  below  a  figure 
representing  the  cost  of  production. 

The  five  spinners,  instead  of  yielding  to  the 
pressure  of  competition,  decide  to  combine  in  the 
interest  of  larger  profits.  One  of  them  is  a 
clever  business  man,  who  persuades  his  fellow 
producers  to  join  with  him  and  advance  the  price 
of  yarn  20  per  cent.  The  yam  makers  now  are 
receiving  a  return  for — 

1.  The  cost  of  running  the  business. 

2.  Wages  or  returns  for  management. 

3.  Profits  on  the  investment. 

4.  Monopoly  power. 

This  fourth  element  is  the  result  of  the  agreement 
whereby  the  producers  of  yarn  advance  the  price 
above  the  cost  basis. 


ONTRIAL  19 

Monopoly  power  is  the  power  to  establish 
prices  above  a  cost  or  competitive  basis.  Any 
advantage  that  enables  a  person  to  do  this  is  a 
monopoly  advantage  or,  as  it  has  recently  been 
called,  a  special  privilege. 

Conceived  in  these  terms,  the  mere  ownership 
of  a  natural  resource,  limited  in  amount  and  sub- 
ject to  a  demand  greater  than  the  supply,  is 
tantamount  to  monopoly,  because,  since  there  is 
not  enough  of  the  resource  to  go  around,  those 
who  do  hold  it  are  able  to  charge  an  extra  or 
monopoly  price  for  it. 

Land  ownership  is  perhaps  the  greatest  single 
monopoly  with  which  society  must  deal.  There 
is  no  sense  of  the  word  in  which  the  private  owner- 
ship of  land  is  not  monopolistic. 

Were  there  enough  land  for  everyone,  and  some 
to  spare,  land  ownership  would  be  in  no  sense  a 
monopoly.  Other  natural  gifts  like  air  and  sun- 
shine exist  in  such  quantities  that  all  people  have 
an  ample  supply  of  them.  Could  air  or  sunlight 
be  privately  owned  and  limited  in  amount,  they 
would  afford  a  monopoly  power  as  great  as  that  of 
land.  The  owners  would  be  able  to  collect  huge 
profits  from  those  who  wished  to  enjoy  air  and 
sunshine.  The  monopoly  of  air  and  sunshine 
has  proved  impossible  hitherto.  No  one  has 
yet  devised  a  scheme  for  fencing  them  in  and 
putting  a  price  on  them. 

Land  can  be  fenced  in.  Unlike  air  and  sun- 
shine, there  is  no  difficulty  in  fixing  the  boundaries 
of  land  ownership. 


20  ANTHRACITE 

Every  community  in  the  world,  except  a  newly 
settled  wilderness  like  central  Canada  today, 
faces  the  land  problem.  In  every  community 
there  are  more  people  who  want  a  piece  of  land 
than  there  are  pieces  of  land  to  go  around.  Hence, 
the  mere  title  to  a  piece  of  land  enables  the  owner 
to  put  a  price  on  it.  He  may  own  a  sand  bar 
near  a  growing  summer  resort,  or  a  farm  in  a 
section  which  has  been  tapped  by  a  railroad  line. 
He  need  never  have  seen  the  land,  much  less 
improved  it.  His  ownership  gives  him  monop- 
oly power. 

There  is  no  cost  attached  to  a  piece  of  unim- 
proved land.  The  owner  has  done  no  work 
upon  it.  He  has  taken  it  just  as  nature  gave  it. 
Nevertheless,  after  he  becomes  the  owner,  if  he 
finds  that  the  land  contains  some  mineral  or  is 
in  some  other  way  desirable,  he  may  secure  a 
very  high  price  for  the  land,  because  he  is  the 
owner. 

The  monopoly  power  of  land  ownership  may  be 
seen  in  a  growing  city.  Near  the  commercial 
center  lies  a  vacant  lot.  Each  year  the  owner  of 
that  lot  learns,  from  the  assessor's  books  and  from 
the  sales  of  neighboring  properties,  that  his  land 
has  increased  $100  in  value.  His  taxes  and  the 
interest  on  his  investment  are  but  $50  a  year,  so 
that  the  rise  in  value  gives  him  a  clear  $50  mon- 
opoly profit.  One  day  a  storekeeper  offers  to  rent 
this  lot  for  twenty  years  and  put  a  store  on  it. 
The  owner  consents,  and  for  the  granting  of  that 
privilege,  he  receives  $1,000  a  year.     From  this 


ONTRIAL  21 

$1,000  he  deducts  interest  and  taxes.      The  re- 
mainder is  monopoly  profits. 

2.  Anthracite  Ownership  Means  Monopoly 

All  returns  which  come  from  land,  because  of 
its  location  or  because  of  its  natiu^al  fertility  in 
soil,  minerals  or  other  resources,  are  monopoly 
returns.  Much  of  the  return  on  anthracite  coal 
falls  in  this  class. 

The  supply  of  anthracite  coal  in  the  United 
States  is  very  limited.  The  demand  for  it  is  wide- 
spread. The  owner  of  anthracite  coal  land  can 
set  a  price  that  will  represent  the  difference 
between  competitive  conditions  and  the  consoli- 
dated ownership  of  the  anthracite  coal  field. 

So  absolute  is  the  monopoly  power  that  is 
inherent  in  the  ownership  of  a  natural  resource, 
limited  in  supply,  that  the  owner  of  a  piece  of 
anthracite  coal  land  may  receive,  for  his  bare 
ownership,  a  price  in  proportion  to  the  amount 
of  coal  that  his  land  contains.  This  is  true  with- 
out any  reference  to  the  conditions  under  which 
the  land  was  obtained. 

Thus,  for  example,  a  man  has  gone  into  the 
mountains  and  bought  a  tract  of  cleared  land. 
The  timber  has  been  cut  off;  the  hills  are  rugged 
and  precipitous;  the  valleys  narrow  and  unfer- 
tile. Some  day  the  land  will  be  reforested.  Mean- 
while it  lies  fallow,  a  prey  to  the  periodic  forest 
fires  that  sweep  off  the  undergrowth  and  prevent 
the  development  of  a  good  growth  of  timber. 
This  land  sells  for  20  cents  an  acre. 


22  ANTHRACITE 

The  owner  feels  that  he  has  a  bargain — $1,000 
for  5,000  acres  of  land.  He  builds  a  hunting  lodge, 
posts  "No  trespassing"  signs,  and  spends  a  few 
days  winter  and  summer  hunting  and  fishing.  To 
him  the  land  would  have  been  cheap  at  twice  the 
price. 

A  geologist,  in  making  a  survey  of  the  region, 
discovers  anthracite  on  the  tract.  There  are  two 
veins — one  thick  and  fine;  the  other  thin  and 
poor.     They  are  both  workable,  however. 

The  nearest  railroad  is  four  miles  from  the  5,000 
acre  tract.  The  land  has  not  changed  in  its  make- 
up for  a  million  years,  and  yet,  no  sooner  is  the 
discovery  of  this  coal  made  known  than  the  owner 
of  the  hunting  lodge  is  asking  $100  an  acre  for 
land  that  was  cheap  at  20  cents  only  yesterday. 

What  is  the  explanation?  Under  this  land 
there  lies  a  vein  of  coal.  People  want  it.  They 
are  willing  to  pay  well  for  it,  and  the  land  owner, 
because  he  is  the  owner,  is  able  to  sell  for  $500,000 
a  tract  that  cost  him  $1,000.  The  difference  in 
value  represents  the  monopoly  power  that  at- 
taches to  the  ownership  of  a  resource,  limited  in 
amount^and  generally  desired  by  the  commimity. 

The  owner  of  the  5,000  acre  tract  may  decide 
not  to  sell  his  land.  Instead,  he  may  make  a  stip- 
ulation that  for  each  ton  of  coal  dug  from  the 
mine  he  is  to  receive  10  cents.  From  that  time 
on,  and  as  long  as  the  property  is  producing  coal, 
this  owner  of  20-cent  hunting  lands  will  be  receiv- 
ing an  income  greater  or  less  in  proportion  to  the 
amount  of  coal  mined,  so  long  as  the  property  is 


ONTRIAL  23 

productive.  This  royalty  privilege  is  another 
phase  of  the  monopoly  power  of  ownership. 

The  owner,  for  no  reason  other  than  his  owner- 
ship, is  able  to  share  in  the  products  of  the  land 
to  which  he  holds  title. 

The  point  is  emphasized  because  of  its  pro- 
found significance.  In  all  economic  discussions 
the  place  of  ownership  must  be  clearly  understood. 
Wherever  there  are  two  pieces  of  land  wanted  by 
three  men,  the  owner  of  each  piece  of  land  will  be 
able  to  put  a  price  on  his  piece. 

Anthracite  coal  land  falls  in  this  monopoly 
class.  There  are  only  a  few  acres  of  such  land. 
These  few  acres  are  wanted  by  a  large  number  of 
people.  The  excess  of  demand  over  supply  en- 
ables the  owners  of  the  anthracite  coal  land  to  set 
a  price  on  it  and  receive  a  monopoly  return  for 
their  ownership. 

3.  Monopoly  through  Concentration  of  Ownership 

Anthracite  land  owners  have  monopoly  power 
because  they  own  the  anthracite  land.  They 
have  clinched  this  monopoly  power  by  concen- 
trating the  ownership  of  the  many  acres  of  anthra- 
cite land  in  the  hands  of  a  very  few  people.^ 

The  continent  is  so  arranged  geologically  that 
for  every  acre  of  anthracite  land  there  are  4,000,- 
000  acres  of  land  that  do  not  contain  anthra- 
cite. This  geologic  fact  places  great  monopoly 
power  in  the  hands  of  every  anthracite  owner. 
Add  to  this  the  successful  business  ventures  that 

1 A  statement  of  the  extent  of  this  monopoly  will  be  found  in  Chapter  2. 


24  ANTHRACITE 

have  culminated  in  the  concentration  of  the  an- 
thracite acres  under  the  control  of  a  very  small 
group  of  interests,  and  the  monopoly  picture  is 
complete. 

The  fact  that  there  is  only  one  acre  of  anthracite 
land  for  each  4,000,000  acres  of  other  land  means 
that  the  chances  for  competition  are  compara- 
tively small.  Concentrate  the  ownership  of  all 
the  anthracite  acres  in  a  few  hands,  and  the  possi- 
bility of  competition  vanishes. 

4.  Competition,  the  Life  of  Trade 

At  this  point  the  reader  will  infer  very  readily 
that  the  complete  monopoly  of  a  natiural  resource 
is  bad.     But  is  it  ? 

The  people  of  the  United  States  are  very  eager 
to  conclude  that  a  thing  is  either  "good"  or 
"bad."  In  the  case  of  monopoly,  they  have 
been  even  more  than  anxious  to  attach  words  of 
opprobrium  and  reproach  to  any  business  organi- 
zation which  displayed  monopoly  characteristics. 
A  long  line  of  anti-trust  statutes  which  have  been 
passed  during  thirty  years  furnish  abundant  evi- 
dence of  the  popular  conviction  that  the  trust 
was  "bad"  and  "wrong."  Farmers  and  small 
business  men  united  their  influences,  and  state 
and  national  legislatures  alike  loaded  the  statute 
books  with  laws  directed  against  certain  forms  of 
monopoly  power. 

The  trust  was  fought  from  all  angles.  Rival 
businesses  were  organized.  There  was,  on  the  one 
hand,  the  trust ;  on  the  other  hand,  the  anti-trust 


ONTRIAL  25 

organization,  which  in  its  turn  became  virtually 
a  trust.  Yet,  strangely  enough,  a  certain  amount 
of  public  approval  attached  to  the  anti-trust  trust 
because  it  was  in  a  position  of  opposition  to  the 
original  trust.  Both  might  be,  and  probably 
were,  charging  similar  prices.  Both  organiza- 
tions might  be  reaping  huge  returns  through  their 
ownership  of  natural  resources,  patents  or  other 
special  privileges.  Yet  the  mere  fact  that  the 
first  organization  represented  the  trust,  while  the 
second  organization  opposed  it,  gave  some  color 
to  the  demand  of  the  second  organization  for 
public  confidence  and  patronage. 

The  opposition  to  the  trust  was  founded  on  the 
axiom  that  competition  is  the  life  of  trade.  The 
phrase  is  an  old  one.  In  the  eighteenth  century 
it  was  revived  and  given  widespread  currency  by 
the  Physiocrats  and  their  followers. 

The  axiom  that ' '  competition  is  the  life  of  trade  " 
was  accepted  as  the  great  and  universal  law  of  the 
economic  world.  Economists  promulgated  it  and 
business  men  did  their  best  to  live  up  to  it.  For 
generations  competition  was  venerated  with  a 
childlike  confidence  by  the  commercial  intelligence 
of  the  Western  World. 

Finally  a  change  came.  Experience  is  an  effect- 
ive teacher.  Men  learned  by  degrees  that  com- 
petition did  not  pay.  Producers  waged  cut-throat 
wars  with  one  another,  until  experience  taught 
them  two  things :  First,  competition  may  ruin  the 
successful  as  well  as  the  unsuccessful  competitor. 
Second,  whoever  won,  the  consumer,  and  not  the 


26  ANTHRACITE 

producer,  derived  the  benefits  under  the  com- 
petitive regime. 

Experience  finally  convinced  the  business  world 
that  competition  was  dangerous  in  the  extreme — 
almost  as  dangerous  to  the  successful  as  to  the 
unsuccessful  competitor.  Many  a  successful 
man,  at  the  end  of  a  price  war,  has  gazed  around 
him  at  the  havoc  wrought  by  the  struggle,  has 
estimated  the  cost  in  health  and  effort,  and  has 
then  wondered  whether,  after  all,  it  really  paid. 
Certainly  it  did  not  pay,  in  business  returns, 
even  for  him.     It  had  ruined  the  man  who  lost. 

The  consumer  liked  competition  because  it  did 
pay.  A  price  war  meant  cheap  goods.  Com- 
petition spelled  plenty  for  the  housewife.  There- 
fore the  consuming  public  was  an  ardent  supporter 
of  the  competitive  regime. 

5.  The  Growth  of  Co-operation  and  Combination 

The  manifold  experiences  of  business  triumphs 
and  failures  combined  with  a  number  of  other 
factors  to  convince  the  producer  that  while  com- 
petition might  be  the  life  of  low  prices,  it  was  the 
death  of  profits.  He  sat  down  with  a  fellow 
manufacturer  at  a  quiet  luncheon  and  whispered 
this  idea  to  him  across  the  table.  The  other 
nodded  intelligently.  He,  too,  had  reached  the 
same  conclusion,  though  he  had  never  dared  to 
breathe  a  word  concerning  it.  The  little  luncheon 
gave  place  to  a  larger  one,  out  of  which  grew  a 
manufacturers'  association,  a  gentlemen's  agree- 
ment, a  trust  or  a  combination.     The  idea  spread 


ONTRIAL  27 

like  wildfire  and  producers  began  to  take  care  of 
themselves  through  the  sure  channels  of  trade 
co-operation  and  organization. 

The  different  forms  of  co-operation  were  vari- 
ously effective.  The  association  with  its  dinners 
and  conventions  gave  men  in  the  same  line  of 
business  a  chance  to  form  speaking  acquaintances 
with  each  other.  The  gentlemen's  agreement 
bound  producers  loosely  together.  They  agreed 
to  fix  prices;  to  sell  only  certain  lines  of  goods;  to 
sell  only  within  a  certain  territory  or  only  under 
certain  conditions.  The  gentlemen's  agreement 
was  unenforceable  at  law,  but  the  erstwhile  com- 
petitors had  seen  a  great  light.  They  realized 
the  superiority  of  co-operation  over  competition 
and  kept  well  in  line. 

The  trust  and  the  combination  were  formal  and 
legal.  Great  funds  of  capital  were  aggregated 
under  the  direction  of  one  group  of  men.  Entire 
industries  were  brought  under  the  control  of  one 
corporation.  Even  though  there  was  no  mon- 
opoly in  theory,  there  was  no  longer  active 
competition  in  practice.  Thus,  through  a  series 
of  "get-together"  devices,  the  era  of  competition 
gave  place  to  the  era  of  co-operation  and  com- 
bination. 

With  the  cessation  of  competition,  the  con- 
sumers cam.e  face  to  face  with  the  pressing  nec- 
essity of  taking  care  of  themselves.  Prices  were 
no  longer  fixed  on  a  competitive  basis.  Some 
prices  rose  mightily.  Others  failed  to  decrease 
in  proportion  to  the  greater  efficiency  of  produc- 


28  ANTHRACITE 

tion.  The  consumers  had  depended  for  price 
regulation  on  a  competitive  war  between  pro- 
ducers, and  the  producers  had  declared  a  more 
or  less  permanent  peace. 

The  transition  from  competition  to  combina- 
tion led  to  a  new  definition  of  monopoly  profits. 
They  could  be  estimated  no  longer  on  the  basis 
of  a  competitive  price  level,  because  there  was  no 
competitive  price  level.  Some  substitute  for  the 
competitive  price  level  was  necessary.  The  one 
most  easy  to  apply  was  the  "cost  of  production." 
Therefore,  at  the  present  time  a  monopoly  profit 
is  defined  as  a  profit  in  excess  of  a  fair  return  on 
the  actual  costs  of  conducting  the  business. 

The  difference  between  a  competitive  price 
level  and  a  cost  price  level  is  theoretically  very 
small.  Competitors  were  supposed,  by  their 
competition,  to  reduce  prices  to  a  point  where 
they  yielded  only  a  fair  or  reasonable  profit. 
Those  who  advocate  the  fixing  of  prices  on  the 
basis  of  cost  insist  that  the  theory  behind  com- 
petition be  made  the  basis  for  regulation.  When- 
ever a  price  is  maintained  at  a  point  that  yields 
more  than  a  fair  return  in  the  actual  cost  of  con- 
ducting a  business,  then  a  monopoly  profit  exists. 
This  definition  does  not  allow  a  business  to  first 
capitalize  its  earnings  and  then  allege  the  charges 
on  this  capitalization  as  one  of  the  costs  of  its 
business.  Cost  prices  are  figured  on  the  physical 
valuation  or  cost  of  replacement  of  the  physical 
property  of  the  business. 

Whatever  their  form,   industries  which  exact 


ONTRIAL  29 

more  than  a  fair  profit  on  the  cost  of  production 
are  in  possession  of  monopoly  advantage.  Where- 
ever  monopoly  power  is  being  exercised  there  is  an 
opportunity  for  a  reduction  of  the  cost  of  living 
through  a  reduction  of  monopoly  prices  to  a 
cost  level. 

6.  Will  Monopoly  Work? 

Whatever  may  be  the  theory  regarding  the 
desirability  of  competition  and  the  menace  of 
monopoly,  the  fact  is  that  the  business  world  is 
being  rapidly  transformed  from  a  competitive  to 
a  co-operative  basis.  Though  this  co-operation 
does  not  always  involve  monopoly,  it  does  involve 
a  considerable  decrease  in  the  amoiuit  of  free 
competition. 

Furthermore,  in  a  scientific  age  men  are  not 
content  to  accept  any  dogmatic  formula  without 
inquiring  into  its  validity.  Our  forefathers  said, 
* '  Competition  is  the  life  of  trade. ' '  Their  descend- 
ants added,  "Monopoly  is  a  public  menace." 
The  students  of  the  present  generation,  surveying 
the  competitive  regime  of  the  early  nineteenth 
century  and  the  monopolistic  regime  of  the  late 
nineteenth  century,  may  well  ask  a  different  kind 
of  a  question.  Monopoly  is  not  a  matter  of 
figures,  but  of  economics.  It  is  neither  good  nor 
bad.  The  sole  question  that  must  be  raised  in 
regard  to  monopoly  is  its  practicability  or 
its  impracticability.  In  short,  "Will  monopoly 
work?" 

In   1850,  before  any  man  had  witnessed  the 


30  ANTHRACITE 

remarkable  industrial  developments  of  the  last 
forty  years,  the  ordinary  student,  as  well  as  the 
ordinary  business  mxan,  would  have  said  tinre- 
servedly  that  competition  is  a  good  thing.  He 
might  have  added,  "It  is  a  good  thing  because  it 
works."  The  experiences  of  the  later  nineteenth 
century  showed  that  however  good  a  thing  com- 
petition might  be,  there  was  a  better  thing, 
namely,  co-operation.  The  business  world  did 
not  work  this  statement  out  theoretically.  It 
had  tried  competition.  It  had  grown  accustomed 
to  competition.  With  this  background  of  expe- 
rience, the  business  world  experimented  with 
co-operation.  The  latter  form  of  organization 
appeared  more  advantageous  than  the  former, 
and  the  business  world  cried:  "Competition  is 
dead — long  live  co-operation  and  combination." 

There  is  no  chance  that  this  generation  will  go 
back  to  the  competitive  regime  of  the  early  nine- 
teenth century.  Society  never  goes  back.  There 
is  a  question,  however,  as  to  whether  the  present 
generation  will  continue  the  monopoly  regime  of 
the  early  twentieth  century.  The  answer  to  that 
question  depends  entirely  upon  the  effectiveness 
or  ineffectiveness  of  monopoly. 

What  has  happened  where  monopoly  has  been 
tried?  How  has  monopoly  succeeded?  Or 
better  still.  Will  the  monopoly  of  natural  re- 
sources accomplish  what  it  was  intended  to 
accomplish?  Upon  the  answers  to  these  and 
like  questions  must  depend  the  fate  of  our  sys- 
tem of  privately  monopolized  natural  resources. 


ONTRIAL  31 

7.  Ownership  as  Opportunity 

Our  forefathers  thought  that  ownership  would 
lead  to  opportunity.  They  failed  to  see  in  it  the 
seeds  of  monopoly. 

The  early  colonists  accepted  a  system  of  private 
ownership  of  natural  resources.  They  had  fled 
from  the  tyranny  of  landlord-dominated  Europe, 
with  an  abiding  dread  in  their  hearts  of  the 
oppression  which  grew  out  of  a  concentration  of 
wealth  control  in  the  hands  of  a  small  ruling  class. 
They  had  lived  for  generations  in  or  near  Euro- 
pean countries  which  were  suffering  from  the 
burden  of  a  landed  aristocracy  which  was  able  to 
exercise  formidable  power  over  all  of  the  institu- 
tions of  society. 

These  early  colonists  enunciated  the  principle 
of  equal  opportunity  religiously  and  politically, 
because  the  weight  of  feudal  oppression  had  been 
felt  in  church  and  state.  At  that  time  there  was 
no  clear  idea  abroad  regarding  the  importance  of 
the  economic  forces  behind  church  and  state. 
They,  in  themselves,  were  looked  upon  as  the 
cause  of  oppression,  and  the  early  settlers  declared 
their  liberation  from  both.  Men  in  the  new 
world  were  to  be  free  and  were  to  have  equal 
opportunity. 

There  were  instances  in  which  the  colonists 
denied  equal  rights.  New  Amsterdam  attempted 
the  Patroon  system,  under  which  the  ownership 
of  the  soil  should  continue  in  the  hands  of  a 
select  landlord  class.  Other  colonies  were  fur- 
nishing land  free  to  settlers,  and  were  even  giving 


32  ANTHRACITE 

bounties  in  the  form  of  tools  and  livestock  to  any- 
one who  was  willing  to  take  land  and  cultivate  it. 
The  competition  was  irresistible,  and  New  Amster- 
dam was  ultimately  forced  to  do  as  the  other 
colonies  did  and  allow  free  opportunities  in  the 
use  of  the  earth. 

The  argument  underlying  the  free  use  of 
natural  resources  was  simple  and,  from  the  view- 
point of  those  times,  irresistible.  The  men  and 
women  who  founded  the  colonies  had  left  the 
despot-ridden  countries  of  the  Old  World,  seeking 
a  place  where  they  might  think  and  believe,  free 
from  oppression.  Their  experience  told  them  that 
landlordism  and  despotism  meant  the  same  thing. 
They  had  been  brought  up  in  countries  where 
practically  all  of  the  desirable  pieces  of  the  earth 
were  owned  by  a  small  class  and  were  handed 
down  from  generation  to  generation  in  the  same 
families.  The  rest  of  the  human  race  must  work 
for  and  pay  tribute  to  these  land-owners.  Feudal- 
ism was  built  on  this  assumption.  The  duties 
which  the  feudal  baron  owed  to  his  tenants  fell 
into  disuse;  the  rents  which  the  tenant  paid  to 
the  feudal  baron  were  transmuted  from  rents  in 
kind  to  rents  in  money,  and  the  peasant  was 
compelled  to  surrender  a  great  portion  of  the 
products  of  his  toil  in  return  for  the  right  to  live 
on  the  earth. 

In  the  days  of  the  English  Commonwealth, 
imder  Cromwell,  the  Digger  Movement  gathered 
its  strength.  The  people  who  had  been  driven 
off  from  the  common  land  as  it  was  enclosed  by 


O  N     T  R  I  A  L  33 

the  great  land-owners,  reasserted  their  right,  but 
without  avail,  to  a  use  of  part  of  the  earth's 
surface.  Everywhere  throughout  Europe  the 
belief  held  sway  that  God  had  intended  the  earth 
for  the  few,  and  that  the  many  must  pay  tribute 
for  the  right  to  a  foothold  in  their  fatherland. 

The  remedy  for  landlord  despotism  clearly  lay 
in  the  direction  of  individual  ownership.  "Give  a 
man  the  possession  of  a  barren  rock,"  cried  one 
of  the  champions  of  this  movement,  "and  he  will 
convert  it  into  a  garden."  Acting  upon  this 
theory,  the  early  American  colonies  granted  to  a 
man  and  his  heirs  forever  the  possession  of  those 
pieces  of  land  for  which  he  could  secure  clear 
title. 

This  plan  of  individually  owned  natural  re- 
sources succeeded  admirably  in  a  new  country. 
For  every  tree  that  was  pre-empted,  a  score  stood 
waiting  for  the  next  claimant;  for  every  acre  of 
land  that  had  been  claimed,  there  were  a  hundred 
still  imtilled  and  unsowed.  The  hills  abounded 
in  wealth,  the  streams  were  full  of  power.  In  the 
early  days  the  forest,  the  rivers  and  the  sea 
yielded  a  bountiful  supply  of  wild  animals  which 
provided  food  and  clothing.  All  of  these  things 
might  be  had  for  the  taking,  and  to  no  one  might 
they  be  denied,  because  each  man  could  get  them 
for  himself. 

8.  The  Fruits  of  Ownership 

This  generation  realizes  with  difficulty  the 
meaning  of  a  frontier.     In  colonial  days  the  man 

3 


34  ANTHRACITE 

who  was  disgusted  or  discouraged  stepped  to  the 
edge  of  civilization.  He  fed,  clothed  and  out- 
fitted himself — not  at  public  expense,  but  at 
nature's  expense. 

Today,  the  United  States  is  bounded  by  the 
oceans  and  by  Mexico  and  Canada.  There  is  no 
frontier — ^no  "free  for  all."  America  is  Hving  a 
new  life. 

With  the  ending  of  the  nineteenth  century  the 
free  land  in  the  United  States  vanished.  Long 
before  that  time  the  best  of  the  natural  resources — 
timber,  minerals,  water-power  and  fertile  agri- 
cultural land — had  been  labeled  "mine"  by  a 
relatively  small  group  of  powerful  industrial  and 
financial  interests.  The  ownership  of  agrictd- 
tural  land  was  still  widely  scattered.  The  owner- 
ship of  the  more  important  timber  and  mineral 
resources  was  being  rapidly  concentrated. 

What  will  be  the  result  of  this  private  owner- 
ship of  natural  resources?  The  time  has  come 
when  that  question  must  be  faced  and  analyzed 
scientifically. 

While  resources  were  free  for  the  asking,  no 
man  could  put  a  price  upon  them  and  demand 
to  be  paid  because  of  his  land  ownership.  The 
moment  that  free  land  disappears,  land  owner- 
ship commands  a  monopoly  price.  In  the  centers 
of  trade  and  industry  this  monopoly  power  is 
enormous.  Where  it  is  exercised  over  very  rich 
resources,  like  coal  lands  or  timber  lands,  the 
monopoly  power  of  private  ownership  is  likewise 
very  great.      Consequently,  immense  prices  are 


O  N     T  R  I  A  L  35 

paid  for  pieces  of  land  that  a  short  time  ago  were 
practically  valueless.  Thus  the  hard,  unyielding 
rock  soil  of  Manhattan,  all  of  which  was  sold  by 
the  Indians  for  a  few  dollars,  is  now  valued  in 
places  at  upwards  of  $40,000,000  an  acre.  This 
immense  valuation  is  the  result  of  the  presence  of 
population,  of  trade  and  of  industry.  The  owner 
of  the  land  need  have  done  nothing  in  the  way  of 
improvement. 

The  land  upon  which  the  City  of  Boston  stands 
was  valued  at  $366,000,000  in  1890,  and  at  $672,- 
000,000  in  1910.  The  interval  of  twenty  years 
resulted  in  a  doubling  of  these  land  values.  The 
farm  land  of  the  United  States  was  worth  $13,- 
000,000,000  in  1900  and  $28,000,000,000  in  1910. 
During  the  same  period  the  value  of  farm  land  in 
Illinois  rose  from  $1,500,000,000  to  $3,000,000,000; 
in  Iowa  from  $1,250,000,000  to  $2,750,000,000; 
in  Kansas,  from  $1,000,000,000  to'  $1,500,000,000. 
The  fact  that  the  land  is  limited  in  amount,  and 
is  in  great  demand,  is  sufficient  to  place  upon  it 
a  high  monopoly  price. 

The  private  ownership  of  natural  resources  was 
a  scheme  that  was  devised  to  stimulate  thrift, 
energy  and  ambition.  It  was  intended  to  give  an 
opportunity  for  life,  liberty  and  the  pursuit  of 
happiness. 

When  the  principle  of  individual  ownership  was 
first  resorted  to  the  United  States  was  a  wilder- 
ness. Resources  existed  for  all,  and  in  abundance. 
Since  that  time  free  land  has  disappeared.  The 
whole  economic  foundation  of  life  has  been  revo- 


36  ANTHRACITE 

lutionized.  There  is  no  more  free  land  and  the 
frontier  has  disappeared. 

Each  change  in  economic  conditions  gives  rise 
to  new  needs  and  new  relations.  Social  forms 
are  modified  because  the  basis  for  life  is  altered. 
Two  generations  ago  the  country's  adjustment  to 
life  included  a  safety  valve  in  the  form  of  a  fron- 
tier. The  frontier  meant  cheap  grazing  land, 
free  agricultural  land,  free  timber  and  free  miner- 
als. Today  each  first-class  piece  of  land  in  the 
United  .States  has  its  price. 

Sooner  or  later  the  American  public  must  decide 
whether  a  system  of  private  property  in  natural 
resources  can  work  advantageously  after  free  land 
disappears.  Up  to  the  point  where  land  ownership 
carried  with  it  no  monopoly  power,  many  legiti- 
mate justifications  could  be  urged  in  its  favor. 
Now  that  private  property  in  land  almost  inevi- 
tably carries  with  it  the  power  to  lay  a  monopoly 
tax  upon  the  industry  of  the  community,  the 
situation  takes  on  a  very  different  aspect. 

9.  Every  System  Must  Produce  Results 

The  system  of  private  ownership  of  natural 
resources,  like  any  other  social  institution,  must 
be  able  to  stand  trial.  Each  social  institution  is 
a  device  adopted  by  society  to  accomplish  certain 
results.  The  bow  and  arrow  is  a  means  of  secur- 
ing game.  The  family  is  a  means  of  protecting 
offspring.  One  is  an  individual  weapon,  the 
other  is  a  social  institution.     Each  has  a  purpose. 

The  bow  and  arrow  is  adopted  because  it  is 


ONTRIAL  37 

more  desirable  as  a  weapon  than  anything  that 
preceded  it.  Neither  the  club  nor  the  flint- 
headed  spear  is  effective  as  compared  with  the 
bow  and  arrow.  Once  the  bow  and  arrow  is 
devised,  it  is  used  until  some  better  v\^eapon  is 
discovered.  The  moment,  however,  that  the 
better  weapon  appears  it  automatically  replaces 
the  bow  and  arrow. 

The  individual  adopts  the  methods  best  calcu- 
lated to  insure  the  success  of  the  things  he  wishes 
to  do.  His  test  of  the  effectiveness  of  a  given 
means  is  the  results  which  it  accomplishes. 

Society,  in  this  respect,  differs  in  no  way  from 
the  individual.  There  are  certain  ends  which 
society  aims  to  accomplish.  To  attain  those  ends, 
men  devise  social  institutions  or  social  methods, 
as  they  might  be  called,  such  as  the  family,  the 
state,  private  property  in  natural  resources.  So 
long  as  these  institutions  achieve  the  results  for 
which  they  were  established,  they  may  hope  to 
perpetuate  themselves.  If  they  fail  in  any  par- 
ticular to  accomplish  these  results,  they  are 
attacked  and  ultimately  demolished.  In  their 
places  rise  new  institutions,  better  calculated  to 
do  society's  work. 

There  is  no  law  of  society  more  inexorable 
than  that  which  involves  the  survival  of  the 
fittest  social  institution.  Given  two  ways  of 
running  an  educational  system,  one  less  advan- 
tageous and  the  other  more  advantageous,  to 
securing  the  results  at  which  society  is  aiming, 
the  more  advantageous  method  must  ultimately 


38  ANTHRACITE 

triumph,  because  men,  individually  and  socially, 
necessarily  choose  the  things  they  believe  to  be 
to  their  greatest  advantage. 

10.  Has  Monopoly  Succeeded? 

The  present  system  of  monopoly  in  natural 
resources  was  devised  to  stimulate  ambition, 
thrift  and  initiative.  It  was  aimed  to  inspire 
men  to  put  forth  greater  effort  in  order  to  avail 
themselves  of  the  greater  opportunities.  At  a 
time  when  there  were  more  farms  than  men 
seeking  farms,  the  private  ownership  of  farm  land 
did  stimulate  and  energize.  That  day  has  passed, 
however.  At  the  present  time  there  are  many 
individuals  who  would  like  to  hold  possession  of 
every  desirable  resource  in  the  United  States. 
Therefore,  the  owners  of  these  resources  put  a 
monopoly  price  on  them  and  secure  a  return  based 
on  their  resource  ownership. 

Another  thing  has  happened  which  was  not 
generally  foreseen.  The  argument  in  favor  of 
natural  resource  monopoly  was  based  on  the 
supposition  that  each  man  would  take  a  piece  of 
land  large  enough  for  him  to  cultivate,  and  that 
upon  this  land  he  would  expend  his  own  energies. 
Two  things  have  intervened  to  prevent  the  reali- 
zation of  this  hope.  First  of  all,  men  took  more 
land  than  they  could  use  and  held  it  for  an 
increase  in  value.  In  the  second  place,  successive 
generations  have  concentrated  land  ownership  to 
a  greater  and  greater  degree. 

So  long  as  there  were  more  farms  than  men, 


ONTRIAL  39 

it  was  difficult  to  get  labor.  Why  should  you 
till  my  land  and  reap  my  crops  when  for  the 
asking  you  could  get  a  farm  of  your  own  on 
which  to  expend  your  energies? 

Today  there  are  more  men  than  farms.  Those 
who  do  not  own  farms,  in  order  to  live,  must 
work  for  those  who  do.  Consequently,  the 
owners,  instead  of  expending  their  own  energy 
in  the  work  of  production  devise  means  whereby 
they  permit  others  to  use  their  property  and  to 
give  them,  in  return  for  this  use,  an  income  upon 
which  they  may  live  without  themselves  expend- 
ing energy. 

There  is  a  second  but  equally  important  point. 
A  few  people  have  secured  possession  of  all  of 
the  valuable  resources.  Herbert  Spencer,  in  the 
now  famous  ninth  chapter  of  his  "Social  Statics," 
pointed  out  the  inevitable  logic  of  a  system  of 
private  ownership  in  natural  resources.  One 
man,  he  explains,  may  own  land  to  the  exclusion 
of  everyone  else.  There  is  no  limit  to  the  amount 
of  land  which  any  one  man  may  own.  There- 
fore, it  is  perfectly  conceivable  that  one  person 
shoiild  obtain  possession  of  an  entire  township, 
county,  state  or  nation,  whereupon  all  other 
people  would  be  trespassers  and  might  remain 
only  while  they  did  the  bidding  of  the  man  who 
owned  the  property. 

Of  course,  the  time  when  one  man  might  own 
the  United  States  is  very  far  distant.  Even 
today,  however,  most  of  the  rich  resources  are 
in  the  hands  of  a  very  few  people,  who  exercise 


40  ANTHRACITE 

their  right  of  ownership  to  exclude  all  others 
from  the  use  of  these  resources  until  they,  the 
owners,  are  ready  to  develop  them. 

It  is  now  manifest  that  the  ownership  of  the 
important  resources — the  choice  bits  of  land — is 
concentrated  in  the  hands  of  a  very  few  people. 
The  incentive  is  taken  away  from  a  great  majority 
of  people  because  the  essence  of  the  argument 
in  favor  of  private  ownership  of  resources  was 
that  the  ownership  would  stimulate  the  owner. 
As  a  matter  of  fact,  the  owners  of  the  great 
resources  are  not  stimulated  to  do  anything  except 
to  get  other  people  to  work  for  them  upon  their 
resources.  In  return  for  this  concession,  they 
secure  a  royalty  or  rent  based  on  the  resource 
value. 

There  is  another  angle  from  which  the  matter 
must  be  considered.  Children  are  being  born 
into  the  world  every  day.  From  the  standpoint 
of  ownership,  what  situation  do  the  children  face 
who  are  bom  at  the  present  time? 

Children  now  come  into  a  world  in  which  all 
of  the  "corner  lots"  are  pre-empted.  Most  of 
the  desirable  property  which  is  not  in  the  hands 
of  the  government  is  labeled  "mine"  by  some 
private  holder.  What  chance  has  the  prospective 
worker  as  against  these  owners?  Merely  this 
chance — unless  his  ancestors  through  their  accu- 
mulations can  constitute  him  an  owner,  he  must 
work  for  the  owners  on  their  property  until  he 
has  accumulated  enough  property  to  be  an  owner 
in  his   turn.      In   other   words,   the  method  of 


ONTRIAL  41 

private  ownership  in  natural  resources  automat- 
ically excludes  the  new-bom  citizen  from  the 
use  of  those  resources  except  on  the  terms — the 
monopoly  terms — which  the  owners  prescribe. 

There  is  a  broader  point  of  view  from  which 
the  matter  may  be  analyzed.  No  social  scheme 
can  succeed  unless  it  makes  men  well  and  happy. 
Any  social  system  which  produces  a  surplus  of 
unhappiness  is  doomed  to  dissolution. 

Even  where  a  social  system  is  well  established, 
if  any  other  plausible  scheme  promises  greater 
health  and  happiness  than  the  one  in  vogue,  or 
if  the  proposed  scheme  grants  happiness  to  a 
larger  number  of  people  than  the  one  in  vogue, 
it  will  ultimately  be  tried,  and  if  it  succeeds, 
it  wiU  replace  the  established  order. 

There  is  no  necessity  for  people  to  adjust 
themselves  to  the  conditions  of  monopoly.  Mon- 
opoly is  not  a  standard  to  which  men  must  con- 
form. It  is  a  method  of  obtaining  social  results. 
If  it  achieves  these  results,  it  will  be  retained  as 
a  social  institution.  If  it  fails  to  achieve  these 
results,  it  will  be  condemned  and  replaced  by 
some  social  institution  that  appears  to  be  ulti- 
mately more  advantageous.  Monopoly  must  be 
adjusted  to  human  needs.  Monopoly  must  result 
in  health  and  happiness.  Unless  it  does  these 
things,  it  cannot  hope  to  endure. 


CHAPTER  2 

THE    ANTHRACITE   PROBLEM 

1.  The  Parties  at  Interest 

The  situation  that  has  prevailed  in  the  anthra- 
cite regions  during  the  past  dozen  years  gives  a 
vivid  idea  of  the  conflicts  that  must  precede  any 
solution  of  the  issues  that  are  raised  by  the  pri- 
vate ownership  of  natural  resources.  The  anthra- 
cite situation  has  been  the  object  of  investigation 
by  the  Federal  as  well  as  of  the  State  govern- 
ment of  Pennsylvania.  Charges  have  been  heaped 
upon  charges,  suits  have  been  instituted  and 
appeals  taken.  The  phials  of  public  wrath  have 
been  poured  out  liberally  through  various  govern- 
mental and  journalistic  channels  upon  the  vexing 
questions  which  the  anthracite  problem  has 
brought  to  the  fore. 

The  public  is  not  alone  in  its  impeachment  of 
the  anthracite  situation.  The  mine  workers  like- 
wise have  played  a  part,  and  at  times  a  very 
energetic  one,  in  the  assaults  upon  the  coal  mine 
owners.  Labor  disturbances  have  followed  one 
another  in  rapid  succession.  At  times  they  have 
been  settled  by  means  of  a  peaceable  agreement; 
at  other  times  they  have  resulted  in  prolonged, 
bitter  strikes.  Since  1898  the  labor  situation  in 
the  anthracite  regions  has  never  dropped  far  below 
the  boiling  point. 

(42) 


THE     PROBLEM  43 

The  public  has  vented  its  wrath.  The  workers 
have  made  their  protest.  Consumers  and  work- 
ers alike  cry  their  anathemas  against  the  exactions 
of  the  operators. 

In  striking  contrast  to  the  dissatisfaction  dis- 
played by  the  public  and  by  the  mine  workers  is 
the  spirit  of  contentment  evinced  by  the  coal 
operators  and  the  coal-carrying  railroads.  These 
parties  at  interest  seem  to  have  no  cause  for  com- 
plaint, and  they  display  no  desire  to  alter  the 
present  status  of  the  industry. 

Each  monopoly  of  natural  resources  by  private 
capital  leads  to  a  controversy  between  the  same 
parties.  The  consumer,  the  worker  and  the  oper- 
ator or  owner  of  the  resource,  each  represent  a 
viewpoint.  Thus  far  in  the  anthracite  field, 
the  operators  are  the  only  parties  at  interest 
who  are  convinced  that  things  should  be  left  as 
they  are. 

2.  The  Use  of  Anthracite 

Anthracite  is  a  concentrated,  monopolized  nat- 
ural resource  upon  which  tens  of  millions  depend 
for  fuel  and  tens  of  thousands  for  a  livelihood. 
There  is  probably  no  resource  of  like  value  which 
affects  directly  a  larger  number  of  people. 

Many  resources  reach  the  consumer  by  a  round- 
about path.  The  iron  ore  travels  a  long  road 
from  the  blast  furnace  to  the  watch-spring.  A 
white  oak  undergoes  many  changes  before  it 
appears  in  the  dining  room  table.  Numerous 
processes  intervene  between  the  wheat  in  the  field 


44  ANTHRACITE 

or  the  hide  on  the  cow's  back  and  the  muffins  or 
the  trim  half-shoes. 

Some  resources  never  reach  the  consumer  at  all. 
The  steel  in  the  freight  car,  for  example,  merely 
transports  the  wheat  that  finally  appears  as 
muffins.  The  copper  and  wood  in  the  locomotive 
do  not  even  come  into  contact  with  the  wheat. 
The  steel  rails,  ties  and  ballast,  the  bridges  and 
cement  culverts  make  the  transportation  possible. 
Yet  the  consumer  never  even  sees  or  hears  of 
these  things. 

The  relation  between  anthracite  and  the  con- 
sumer is  direct  and  immediate.  Anthracite  is 
used  mainly  for  home  consumption.  In  1913,  of 
the  71,296,000  tons  shipped  from  the  mines,  61.6 
per  cent  were  of  sizes  above  pea.  This  total  in- 
cludes lump  coal  and  broken  coal,  much  of  which 
is  used  for  commercial  purposes.  At  the  same 
time  it  excludes  pea  coal,  a  great  deal  of  which  is 
now  used  for  domestic  purposes.  Anthracite  is 
sold  chiefly  in  four  sizes — egg,  stove,  chestnut 
and  pea.  For  1913  the  shipments  of  these  four 
sizes  were  as  follows  ■} 

Egg 8,928,792  long  tons 

Stove 13,841,777    " 

Chestnut 17,065,632    " 

Pea 8,142,571     " 

Since  pea,  as  shown  by  the  recent  change  in  its 
price,  is  now  primarily  a  domestic  and  not  a  com- 
mercial coal,  it  appears  that  these  four  sizes  of  coal 

»  "Mineral  Resources  of  the  United  States,  1913,"  Part  II,  page  889  jf. 


THE     PROBLEM  45 

alone  account  for  about  five-sevenths  of  the  total 
amount  of  coal  shipped.  In  other  words,  the 
amount  of  anthracite  which  goes  every  year  to  the 
consumers  of  the  United  States  is  approximately 
50,000,000  tons. 

No  accurate  statement  can  be  made  of  the 
number  of  persons  who  use  these  50,000,000  tons 
of  anthracite;  but  if  the  average  sale  per  family 
is  five  tons,  10,000,000  famihes  (about  45,000,000 
people)  are  dependent  for  their  fuel  upon  the 
supply  of  anthracite.  If  the  sale  averages  ten 
tons  per  family,  about  22,500,000  people  would 
be  dependent  upon  anthracite.  These  figures  are 
only  approximations,  but  they  give  some  idea  of 
the  enormous  extent  to  which  anthracite  is  used 
in  the  homes  of  the  American  people. 

There  were,  in  the  United  States  in  1910,  91,- 
000,000  people,  Hving  in  20,000,000  families.  This 
makes  just  under  five  persons  per  family.  If  the 
suggestion  in  the  last  paragraph  was  in  any 
measure  correct,  from  a  quarter  to  a.  half  of  the 
families  in  the  United  States  depend  more  or 
less  directly  upon  anthracite  for  their  cooking 
and  heating. 

From  a  quarter  to  a  half  of  the  population 
of  the  United  States  is  dependent  upon  the 
supply  of  anthracite  coal,  which  comes  pri- 
marily from  five  counties  in  the  northeastern 
part  of  Pennsylvania.  There  is  no  other  an- 
thracite coal  of  importance  now  being  mined 
in  the  United  States.  The  whole  anthracite 
industry  is  concentrated  in  one  small  section  of 


46  ANTHRACITE 

one  State.  ^  It  thus  affords  an  ideal  opportu- 
nity for  monopolization. 

If  the  anthracite  deposits  were  scattered,  as 
the  bituminous  deposits  are,  through  all  parts 
of  the  country,  monopoly  would  be  more  difficult. 
With  the  available  supply  of  anthracite  concen- 
trated in  one  small  area,  the  possibilities  for 
monopolization  are  unexcelled. 

The  anthracite  industry,  although  restricted 
in  area,  has  a  widespread  influence  through  the 
large  number  of  consumers  who  look  to  it  for 
their  fuel  supply.  The  millions  of  families  who 
depend  entirely  or  partly  upon  the  supply 
of  anthracite  coal  for  their  fuel  comprise  the 
greater  part  of  the  population  of  the  northern 
and  eastern  sections  of  the  United  States.  Here 
is  a  great  body  of  people,  all  using  the  output  of  a 
natural  resource  which  can  be  supplied  from  only  one 
tiny  part  of  the  area  upon  which  these  millions  live. 

Many  workers  are  dependent  upon  the  anthra- 
cite industry.  The  payrolls  of  the  operators 
contain  the  names  of  175,000  men  and  boys. 
In  addition  to  this  number,  tens  of  thousands 
of  persons  employed  by  railroads  and  other 
businesses  which  depend  for  their  existence  upon 
the  anthracite  industry  must  be  counted  in  as 
having  a  direct  relation  to  anthracite. 

3.  The  Supply  of  Anthracite 

When  mining  operations  began  a  century  and 
a  half   ago,   the   three   Pennsylvania   anthracite 

'  For  an  elaboration  of  this  point  see  "The  Anthracite  Coal  Combination," 
Eliot  Jones,  Cambridge,  Harvard  University  Press,  1914,  Chapter  1. 


THE     PROBLEM  47 

regions  contained  approximately  19,000,000,000 
tons  of  coal.  Since  that  time,  the  amount  taken 
from  the  mines  or  made  unavailable  by  the  aban- 
donment of  old  workings  is  equal  to  about  5,000,- 
000,000  tons,  leaving  an  estimated  reserve  of 
14,000,000,000  tons. 

Apparently,  the  unused  supply  of  anthracite 
is  three  times  as  great  as  the  amount  already 
used.  Another  important  fact  must  be  borne 
in  mind,  however.  The  amount  of  anthracite 
actually  mined  to  date  is  only  about  2,000,000,- 
000  tons.  The  amount  "wasted"  and  "left  in 
old  mines"  is  3,267,500,000  tons.  Under  the 
system  of  privately  owned  resources,  which  was 
so  generally  relied  upon  to  stimulate  ambition 
and  arouse  initiative,  for  each  ton  mined  a  ton 
and  a  half  was  left  unused.  To  be  sure,  some 
of  the  old  mines  are  being  reopened  at  great 
expense,  and  the  coal  that  they  contain  salvaged. 
For  the  most  part,  however,  this  coal  must  be  a 
permanent   loss. 

Experts  figure  that  25  per  cent  of  the  coal 
can  still  be  secured  from  old  mines  and  that  50 
per  cent  of  the  coal  can  be  had  from  the  new 
mines.  The  total  available  supply  of  anthracite 
is  therefore  about  8,000,000,000  tons.^ 

Taking  the  amount  actually  mined  as  a  stand- 
ard, it  appears  that  the  coal  still  in  the  mines 
is  equal  to  seven  times  the  amoimt  of  the  product 

•  The  figures  on  which  these  statements  are  based  will  be  found  in  "Increase 
in  Prices  of  Anthracite  Coal,"  House  Document  No.  1442,  62d  Congress, 
Third  Session,  p.  126. 


48  ANTHRACITE 

to  date  and  that  the  coal  that  can  be  made 
available  for  consumption  is  equal  to  four 
times  the  production  to  date.  Anthracite  is 
still,  and  for  years  will  be,  a  resource  that  must 
play  an  important  role  in  the  life  of  the  com- 
munity. 

At  the  present  rate  of  mining,  the  supply  of 
anthracite  will  last  about  one  hundred  years. 
Four  generations  of  people  will  therefore  look 
to  the  anthracite  field  of  Pennsylvania  as  a 
source  for  their  fuel  supply.  Discoveries  and 
inventions  may  replace  anthracite  with  some 
far  more  usable  source  of  heat.  Let  the  present 
situation  continue,  however,  and  for  a  century 
to  come  the  anthracite  field  will  present  a  prob- 
lem to  the  American  consuming  public. 

Although  these  figures  are  rough  estimates, 
they  are  based  on  the  best  available  expert 
knowledge.  They  may  be  incorrect  in  detail, 
but  in  the  large  they  furnish  conclusive  evidence 
of  the  immense  importance  of  anthracite  to  the 
consumer  of  today  and  of  the  great  probability 
that  for  a  long  time  to  come  anthracite  will  be  a 
resource  of  the  first  importance  to  the  American 
people. 

Millions  of  consumers  and  hundreds  of  thou- 
sands of  workers  depend  directly  and  indirectly 
upon  the  supply  of  anthracite.  This  supply, 
to  the  extent  of  8,000,000,000  tons  is  still  avail- 
able for  use.  This  and  the  succeeding  generations 
must  determine  the  conditions  imder  which  this 
anthracite  shall  be  produced. 


THE     PROBLEM  49 

4-  The  Basis  for  Anthracite  Monopoly 

No  less  important  than  the  facts  regarding 
the  available  supply  of  anthracite  are  the  facts 
that  relate  to  the  control  of  that  supply.  Here 
are  millions  of  people  who  depend  for  their  fuel 
upon  one  resource.  Are  they  in  a  position  to 
say  how  much  coal  shall  be  mined  and  under 
what  circumstances?  Their  happiness  and  well- 
being  depends,  in  part,  on  the  anthracite  coal 
which  they  use.  Can  they  decide  what  shall 
be  done  in  the  coal  fields? 

Obviously  they  cannot.  First,  because  the 
coal  fields  are  privately  owned  under  a  system 
of  property  ownership  that  permits  the  owner 
to  do  practically  as  he  will  with  his  own.  Second, 
because  the  virtual  control  of  the  anthracite 
fields  is  vested  in  a  very  small  group  of  persons 
who  make  common  cause  wherever  their  interests 
are  threatened. 

The  owners  of  the  anthracite  fields  have  suc- 
ceeded in  establishing  a  monopoly  of  the  most 
absolute  character  through  a  system  of  inter- 
corporate relations.  There  have  been  times 
when  the  monopolists  were  at  a  loss  to  make 
profits  on  their  vast  holdings  of  unused  coal  land. 
In  recent  years,  however,  the  system  of  railroad 
control  has  brought  huge  benefits  to  the  mon- 
opolists. 

There  are  quite  a  number  of  sources  from  which 
may  be  gained  some  idea  of  the  extent  of  the 
combination  in  the  anthracite  industry.  The 
inquiries  conducted  by  the  Interstate  Commerce 


50  ANTHRACITE 

Commission  and  the  Pennsylvania  Railroad  Com- 
mission provide  much  material.  Some  sugges- 
tions occur  in  the  report  by  the  United  States 
Commissioner  of  Labor  on  the  "Increase  in 
Prices  of  Anthracite  Coal  following  the  wage 
agreement  of  May  20,  1912."  Arthur  E.  Suffem 
devotes  a  long  chapter  of  his  book  on  "Concilia- 
tion and  Arbitration  in  the  Coal  Industry  of 
America"  to  an  analysis  of  the  anthracite  situa- 
tion. The  most  elaborate  and  complete  study,  to 
date,  of  the  anthracite  combination  is  that  pre- 
pared by  Prof.  Eliot  Jones,  and  published  in  1914. 
Professor  Jones  has  gone  carefully  into  the  cor- 
poration reports,  the  various  investigations  of  the 
anthracite  industry,  thereby  securing  data  from 
the  corporation  as  well  as  the  governmental  point 
of  view.  Professor  Jones'  book  gives  by  far  the 
best  summary  of  the  co-operative  activities  of 
those  who  own  and  control  the  anthracite  mining 
operations. 

The  anthracite  field  has  for  many  years  been 
the  scene  of  attempts  at  combination,  particularly 
between  the  carriers  of  coal  and  the  coal  operators. 
During  the  later  years,  however,  the  combina- 
tions have  been  primarily  between  the  coal- 
carrying  railroads. 

5.  Unsuccessful  Combinations 

The  first  combination  to  control  the  anthracite 
industry  was  formed  early  in  1873.  From  that 
time  on  to  1898  there  was  a  succession  of  com- 
binations,  each  of  which  was  dissolved  because 


THE     PROBLEM  51 

of  the  lack  of  group  feeling  among  the  partici- 
pants. 

The  combination  of  1873  was  a  combination  of 
carriers.  The  Philadelphia  and  Reading,  the 
Central  Railroad  of  New  Jersey,  the  Lehigh 
Valley,  the  Lackawanna,  and  the  Delaware  and 
Hudson  were  responsible  for  the  formation  of  the 
combination.  No  attempt  was  made  to  restrict 
the  output,  but  the  amount  of  coal  shipped  to 
competitive  points  was  limited  in  the  following 
manner.  An  estimate  was  made  of  the  total 
amount  of  coal  at  tide-water  points  during  the 
year,  and  this  total  was  divided  among  the  com- 
panies entering  into  the  agreement,  according  to 
the  capacity  of  the  mines  shipping  over  the 
various  lines.  This  agreement  was  to  be  enforced 
through  a  Board  of  Control  composed  of  the  presi- 
dents of  the  railroads  involved  in  the  combination. 

While  the  combination  lasted  it  had  a  marked 
effect.  Prices  were  higher  and  more  stable  as  a 
result  of  the  combination. 

Between  1876  and  1878  the  anthracite  coal 
trade  remained  under  competitive  conditions. 
There  was  a  considerable  increase  in  the  produc- 
tion of  coal.  Prices  fell  and  competition  proved 
to  be  the  death  of  profits.  Even  those  who 
succeeded  in  the  competitive  wars  felt  the  onus 
of  reduced  earnings.  The  effects  of  the  com- 
petition were  so  marked  that,  to  quote  Professor 
Jones  (p.  44),  "In  1877,  at  least  four  of  the 
important  transportation  companies,  each  of 
which  had  been  paying  liberal  dividends  for  sev- 


52  ANTHRACITE 

eral  years,  suspended  their  dividend  payments, 
and  several  others  reduced  their  customary 
rates."  The  results  of  competition  were  so 
evidently  disastrous  that  a  new  effort  at  com- 
bination was  made  in  1878.  For  the  next  few 
years,  while  there  was  no  actual  allotment  of  the 
amounts  of  coal  which  any  railroad  might  produce 
during  the  year,  there  was  "a  friendly  under- 
standing among  the  companies"  which  resulted 
in  "a  combination,  perhaps  as  effective  as  a 
formal  agreement.  "^  Under  this  tacit  agreement, 
the  number  of  days  during  which  production  of 
coal  should  be  discontinued  was  regulated  in 
accordance  with  the  demand.  For  example, 
during  1880,  Dr.  Jones  reports  that  the  "pro- 
duction of  coal  was  restricted  SS  days,"  and 
cites  the  annual  report  of  the  Reading  Railroad 
as  authority  for  this  statement. 

During  the  next  few  years  a  number  of  rail- 
roads changed  hands.  There  was  considerable 
buying  and  leasing,  and  interwoven  with  these 
commercial  activities  there  was  a  strong  effort  at 
more  complete  combination.  As  a  matter  of 
fact,  no  effective  organization  was  formed  until 
the  Reading  system  came  into  being. 

The  spectacular  rise  of  the  Reading  interests 
makes  one  of  the  most  significant  chapters  in  the 
history  of  modern  finance.  The  Reading  Rail- 
road leased  the  Lehigh  Valley  Railroad,  and 
through  the  incorporation  of  the  Port  Reading 
Railroad  it   was    able  to  secure  a  lease  of  the 


1  "The  Anthracite  Coal  Combination,"  op.  cil.,  p.  46. 


THE     PROBLEM  53 

Central  Railroad  of  New  Jersey.  The  Phila- 
delphia and  Reading  Coal  and  Iron  Company 
also  secured  control,  through  a  lease,  of  the 
Lehigh  Coal  Company,  and  by  another  business 
arrangement,  of  the  Lehigh  and  Wilkes-Barre 
Coal  Company,  The  Lehigh  Valley  Coal  Com- 
pany was  a  mining  company  of  the  Lehigh  Valley 
Railroad,  and  the  Lehigh  and  Wilkes-Barre  Coal 
Company  was  "practically  owned"  by  the  Cen- 
tral Railroad  of  New  Jersey.  As  a  further  asset 
in  the  organization  of  the  anthracite  field,  Presi- 
dent Sloan  of  the  Lackawanna  announced  "that 
the  management  of  the  Lackawanna  was  in  sym- 
pathy with  the  plans  of  the  Reading."  "The 
Reading  Railroad  had  thus  secured  control  of 
two  competing  railroads  and  their  coal  companies, 
and  had  established,  through  purchases  of  stock 
and  interchange  of  directors,  a  community  inter- 
est with  still  another  railroad  (the  Lackawanna)."^ 
As  a  result  of  these  transactions  the  Reading 
interests  controlled  70  per  cent  of  the  total  ship- 
ments of  anthracite  coal.  At  the  same  time,  the 
Reading  purchased  largely  of  Boston  and  Maine 
stock,  and  an  effort  was  made  by  the  Reading 
system  to  secure  a  new  market  in  New  England. 
The  effect  of  the  combination  on  prices  was 
immediate.  Stove  coal  advanced  more  than  a 
dollar  per  ton  between  February  and  September, 
1892.  This  advance  led  to  a  public  outcry;  the 
Attorney-General  of  New  Jersey  appHed  for  an 
injunction   to   dissolve   the   lease   by   which   the 

•  "The  Anthracite  Coal  Combination,"  op.  cii.,  p.  52. 


54  ANTHRACITE 

Reading  held  the  Central  Railroad  of  New  Jersey ; 
the  attempt  of  the  Reading  to  enter  New  England 
met  with  hostility  from  an  influential  New  York 
banking  house ;  the  credit  of  the  Reading,  already 
over-strained,  broke  during  the  panic  of  1893,  and 
in  February  of  that  year  the  Reading  failed.  From 
this  failure  until  1898  there  was  no  effective  union 
of  anthracite  interests. 

The  strenuous  efforts  made  between  1873  and 
1898  to  perfect  an  anthracite  combination  are 
ascribed  by  Professor  Jones  to  two  causes:  "First, 
the  need  of  meeting  the  interest  charges  upon  the 
huge  obligations  incurred  by  the  companies  in 
attempting  to  secure  control  of  the  coal  lands. 
Second,  the  intermittent  character  of  the  trade." 
(Pp.  57-58.)  The  experience  of  the  railroads 
during  this  period  taught  some  emphatic  lessons. 
While  an  effective  combination  was  maintained, 
prices  went  up,  but  so  did  dividends.  Combina- 
tion and  comfortable  profits,  to  all  appearances, 
were  synonymous  terms.  On  the  other  hand,  the 
absence  of  combination  led  to  bitter  price  wars,  to 
lower  prices,  to  vanishing  dividends.  Competi- 
tion was  deadly;    combination  revivified  profits. 

The  lesson  was  plain.  The  moral  was  beyond 
question.  The  anthracite  carriers  accepted  it  and 
went  about  the  formation  of  an  effective  combina- 
tion. 

6.  An  Elective  Anthracite  Combination 

Since  1898  the  co-operation  between  the  anthra- 
cite operators  and  carriers  has  been  most  com- 


THE     PROBLEM  55 

plete.  Professor  Jones  ascribes  this  co-operation 
to  "railroad  consolidation";  "the  development  of 
a  community  of  interest  among  the  railroads"; 
and  "the  practical  elimination  of  the  independent 
operators."     (P.  59.) 

The  Erie  Railroad,  early  in  1898,  purchased  a 
controlling  interest  in  the  New  York,  Susquehanna 
and  Western  Railroad.  The  purchase  was  effected 
by  means  of  a  large  Erie  stock  issue,  the  shares 
of  which  were  exchanged  for  Susquehanna  Rail- 
road stock.  The  purchase  was  carried  out  by  the 
Erie  in  order  to  remove  the  danger  of  competition 
which  the  rapid  development  of  the  Susquehanna 
threatened. 

The  movement  toward  railroad  consolidation 
received  a  great  impetus  through  a  purchase  by 
the  Reading  Company,  which  was  the  holding 
company  of  the  Philadelphia  and  Reading  Rail- 
way Company,  and  of  the  Philadelphia  and  Read- 
ing Coal  and  Iron  Company,  of  a  controlling  in- 
terest in  the  Central  Railroad  of  New  Jersey. 
Court  proceedings  and  bankruptcy  had  com- 
pelled the  Reading  interests  to  relinquish  their 
former  hold  on  the  Jersey  Central.  The  obsta- 
cles to  consolidation  were  removed  by  the  pur- 
chase in  1901  of  145,000  Central  of  New  Jersey 
shares  (53  per  cent  of  the  total  outstanding  stock) 
at  $160  per  share. 

The  price  paid  for  the  Jersey  Central  stock  was 
high,  as  compared  with  market  quotations,  but 
"the  combination  of  the  two  railroads  placed 
nearly  one- third  of  the  total  shipments  of  coal 


56  ANTHRACITE 

under  the  control  of  the  Reading  Company."  For 
the  future,  the  advantage  was  even  greater,  be- 
cause the  Jersey  Central  owned  the  second  largest 
reserve  supply  of  coal.  Through  the  acquisition 
of  this  reserve,  "the  Reading  system  owned  and 
controlled  about  63  per  cent  of  all  the  unmined 
coal  in  the  state  of  Pennsylvania."^ 

The  President  of  the  Reading  Company  gave 
the  following  explanation  of  the  purchase  of  the 
Central  of  New  Jersey  by  the  Reading  Company: 

'  "The  Reading  must  get  to  New  York  over  the  Jersey  Central 
system.  ...  In  December,  1900,  I  happened  to  be  in  New 
York  and  I  was  told  that  the  gentlemen  who  controlled  the  New 
Jersey  Central  were  tired  of  it  and  that  the  stock  was  for  sale. 
I  was  also  told  that  the  Baltimore  and  Ohio  Railroad  had  made 
an  offer  for  this  stock,  which  the  parties  had  refused  because  they 
considered  it  too  small.  This  information  was  a  great  surprise 
and  I  at  once  went  to  Mr.  Morgan,  who  was  a  voting  trustee 
of  the  Reading  Company  and  told  him  that  the  situation  was 
most  alarming;  that  it  would  be  the  ruin  of  the  Reading  property 
if  an  antagonistic  company  got  control  of  the  Jersey  Central,  or 
if  the  Baltimore  and  Ohio  got  us  by  the  throat  in  that  way  and 
could  control  our  terminals  in  New  York,  and  that  therefore 
the  matter  called  for  prompt  action.  I  told  him  then  that  I 
always  thought  that  the  Jersey  Central  could  be  legally  bought; 
that  the  limitations  in  the  laws  of  New  Jersey  applied  only  to 
leasing  and  that,  under  the  powers  of  the  Reading  Company 
and  under  the  statutes  of  New  Jersey,  we  could  undoubtedly 
buy  a  majority  of  the  stock.  He  told  me  to  keep  my  own  counsel 
and  look  up  the  whole  subject  and  see  what  could  be  done.  I 
came  home  and  I  made  a  critical  and  careful  examination  of  the 
reports  of  the  New  Jersey  Central  Railroad  for  a  number  of  years, 
to  see  what  in  my  judgment  its  stock  would  be  worth,  taking 
into  account  the  future  possibilities.     I  also  took  up  the  ques- 

1  "The  Anthracite  Coal  Combination,"  op.  cit.,  p.  62. 


THE     PROBLEM  57 

tion  of  how  we  could  buy  it  and  finance  it.  I  made  a  report 
to  Mr.  Morgan  in  about  a  week's  time.  It  took  me  a  good 
while  to  get  aU  the  information  I  got,  because  I  had  to  do  it 
secretly,  you  know,  as  counsel.  I  sent  it  to  Mr.  Morgan.  .  .  . 
When  I  got  home,  one  night  in  Reading,  there  was  a  call  at  the 
telephone  and  I  went  to  the  phone  and  Mr.  Morgan  was  there, 
telHng  me  to  come  to  New  York  immediately,  that  I  must  come 
on  at  once  about  that  Jersey  Central  business.  I  went  to  New 
York  the  next  morning.  I  saw  Mr.  Alorgan.  ...  He  said  to 
me,  "What  do  you  think  is  the  fair  price?"  I  said,  "I  have 
named  what  I  think  is  the  fair  price  in  there."  He  called  for 
Mr.  Baker,  who  was  the  chairman  of  their  committee,  or  a  lead- 
ing man  in  it.  Mr.  Baker  came  over  and  we  sat  down  and  dick- 
ered for  about  five  minutes,  until  Mr.  Baker  said  they  would 
take  one  hundred  and  sixty  and  I  said  I  thought  I  would  advise 
that,  and  I  went  to  the  phone  and  called  up  Mr.  Welsh  and  Mr. 
Harris,  who  were,  with  myself,  a  majority  of  the  executive  com- 
mittee and  they  said,  "Yes,"  and  the  deal  was  closed.  That  is 
the  whole  story.  We  did  not  even  make  a  writing  about  it. 
Mr.  Baker  said  he  would  undertake  himself  and  with  Mr.  Max- 
well and  friends  to  deHver  us  a  majority  of  the  stock."^ 

Professor  Jones  feels  that  President  Baer  over- 
emphasized the  danger  of  competition.  He  seems 
to  have  minimized  the  obvious  desirabihty  of 
securing  so  large  a  proportion  of  the  future  coal 
supply. 

These  transactions  placed  the  Reading  in  a 
position  of  supreme  importance.  Holding  nearly 
two-thirds  of  the  available  supply  of  unmined 
anthracite,  and  with  a  third  of  the  annual  ship- 
ments from  the  anthracite  regions,  the  Reading 
interests  were  in  a  position  to  exert  a  great 
influence  over  the  anthracite  industry. 

1  "The  Anthracite  Coal  Combination,"  op.  cit.,  pp.  63-64. 


58  ANTHRACITE 

The  movement  toward  combination  was  fur- 
thered by  a  large  extension  of  control  by  a  nimi- 
ber  of  other  railroads  over  coal  companies  and 
coal  lands.  These  developments  placed  under 
the  direct  control  of  the  coal  carriers  the  unmined 
anthracite  and  the  machinery  of  production. 
They  already  owned  the  means  of  transportation. 
The  control  was  thus  made  absolute,  from  mine 
to  consumer. 

7.  Railroad  Unity 

Harmony  in  the  anthracite  coal  fields  has  been 
furthered  by  the  establishment  of  a  greater 
degree  of  common  interest  among  the  railroads. 
This  has  been  made  possible  through  the  inter- 
ownership  of  stock  and  through  interlocking  direc- 
torates. During  the  early  periods  of  combination 
tonnage  division  had  been  resorted  to  as  a  method 
of  establishing  a  community  of  interest.  The  newer 
device  has  proved  far  more  effective.  Professor 
Jones  gives  the  following  instance  of  the  method 
pursued  in  carrying  forward  the  movement. 

"An  important  step  in  bringing  about  greater 
unity  of  action  in  the  management  of  the  coal 
trade  through  the  interchange  of  stock  owner- 
ship was  the  joint  purchase  by  several  of  the  coal 
roads  of  a  large  block  of  the  stock  of  the  Lehigh 
Valley  Railroad.  Early  in  1901  the  Lake  Shore 
and  Michigan  Southern,  owning  over  21.6  per 
cent  of  the  stock  of  the  Reading  Company  and 
in  turn  controlled  by  the  New  York  Central, 
agreed  with  the  Reading  Company,  the  Central 


THE     PROBLEM  59 

of  New  Jersey,  the  Lackawanna  and  the  Erie 
to  purchase  $5,700,000,  $1,000,000,  $1,600,000, 
$1,850,000  and  $1,850,000  respectively— in  all 
$12,000,000— of  the  stock  of  the  Lehigh  Valley, 
or  nearly  30  per  cent  of  the  total  stock.  The 
stock  was  not  all  purchased  at  the  same  time,  but 
it  is  clear  from  President's  Baer's  testimony  that 
the  railroads  jointly  agreed  to  piirchase  the  stock, 
for  in  his  testimony  he  said  that  the  Lehigh  Val- 
ley was  in  bad  shape,  and  it  was  thought  very 
dangerous  to  let  it  go  into  a  receiver's  hands, 
because  of  the  efTect  it  would  have  on  the  other 
railroads  and  on  general  business. 

"After  talking  that  over  with  a  number  of 
gentlemen,  Mr.  Morgan  being  anxious  that  it 
should  be  done,  I  came  over  to  Philadelphia 
and  saw  Mr.  Stotesbury  and  suggested  that  he 
see  the  trustees  of  the  Packer  estate  and  of  the 
college — the  Lehigh  University  had  an  interest 
in  it.  We  agreed  to  buy  the  stock.  Then  we 
divided  it  up  between  the  four  systems.  I  in- 
sisted that  the  Lake  Shore  and  the  Vanderbilt 
System,  which  was  the  strong  system,  should 
take  a  big  block  of  the  stock  and  the  rest  of  us 
should  not  be  loaded  down,  because  I  did  not 
know  whether  we  could  save  the  Lehigh  Valley. 

"After  the  purchases  had  been  constunmated, 
Mr.  Thomas,  who  had  been  president  of  the  Erie 
Railroad,  was  elected  president  and  a  director  of 
the  Lehigh  Valley;  Mr.  Baer,  president  of  the 
Reading  System  and  of  the  Central  of  New  Jer- 
sey, became  a  member  of  the  Executive  Com- 


60  ANTHRACITE 

mittee  and  of  the  Board  of  Directors,  and  Mr. 
J.  R.  Maxwell,  Mr.  G.  F.  Baker  and  Mr.  H. 
McK.  Twombly,  all  officers  or  directors  of  some 
of  the  other  companies,  became  directors  of  the 
Lehigh  Valley.  The  anthracite  coal  railroads 
thus  virtually  secured  control  of  the  Lehigh 
Valley  and  brought  it  into  assured  harmony  with 
the  controlling  interests  in  the  anthracite  coal 
trade.  "1 

8.  Coal  Mine  Control 

The  establishment  of  interlocking  directorates 
has  worked  toward  the  same  end.  The  presence 
on  one  Board  of  Directors  of  a  man  representing 
other  transportation,  mining  or  industrial  inter- 
ests goes  far  toward  bringing  these  interests  into 
closer  working  harmony. 

Another  important  factor  in  the  development 
of  an  effective  anthracite  combination  has  been 
the  elimination  of  independent  operators.  This 
has  been  done  in  two  ways:  first,  by  purchase; 
second,  by  the  general  establishment  of  percent- 
age contracts. 

An  interesting  instance  of  this  purchase  method 
is  the  use  made  by  the  Reading  Company  inter- 
ests of  the  Temple  Iron  Company,  which  had  a 
charter  granting  it  very  broad  powers.  Simpson 
and  Watkins,  who  were  large  independent  opera- 
tors, were  bought  out  through  the  Temple  Iron 
Company.  The  stock  of  the  company  was  largely 
increased;    bonds  were  issued,   and  through  the 

1  "The  Anthracite  Coal  Combination,"  op.  cil.,  pp.  68-69. 


THE     PROBLEM  61 

firm  of  J.  P.  Morgan  &  Co.,  the  Simpson  and 
Watkins  property  was  sold  for  $5,000,000. 
Through  an  involved  financial  transaction,  the 
Temple  Iron  Company  finally  obtained  title  to 
the  property.  The  Reading  Company,  the 
Central  of  New  Jersey,  the  Lehigh  Valley,  the 
Lackaw^anna,  the  Erie  and  the  New  York,  Sus- 
quehanna and  Western — all  protected  the  credit  of 
the  Temple  Iron  Company  by  agreeing  to  take 
certain  percentages  of  the  capital  stock  of  the 
company  and  of  its  funded  debt.  These  per- 
centages were  determined  by  the  proportion  of 
anthracite  tonnage  handled  by  each  railroad. 
The  purchase  agreement  became  effective  January 
1,  1904.  By  means  of  a  proxy  the  practical  con- 
trol of  the  Iron  Company  was  left  with  the  presi- 
dent of  the  Reading  interests.  "He  and  the 
presidents  of  the  roads  entering  into  the  guar- 
antee were  elected  directors  of  the  Temple  Iron 
Company,  as  were  also  a  few  personal  friends  of 
Mr.  Baer."^  Although  the  original  agreement 
included  only  part  of  the  anthracite  roads,  "the 
other  anthracite  coal  roads,  except  the  Pennsyl- 
vania, have,  since  1899,  at  some  time  or  other, 
been  represented  on  the  directorate  of  the  Temple 
Iron  Company.  "2 

An  effort  made  by  the  Pennsylvania  Coal  Com- 
pany to  build  an  independent  railroad  to  tide- 
water led  to  the  purchase  of  the  company,  through 
the  firm  of  J.  P.  Morgan  &  Co.,  by  the  Erie.     This 

>  "The  Anthracite  Coal  Combination,"  op.  cil.,  p.  80. 
2  Ibid.,  p.  82. 


62  ANTHRACITE 

gave  to  the  Erie  the  full  tonnage  of  the  Pennsyl- 
vania Coal  Company,  which  was  producing  in 
1899  neariy  5  per  cent  of  the  total  anthracite 
coal  shipments. 

A  number  of  other  purchases  were  effected  about 
the  same  time.  "Since  1900,  numicrous  other 
firms  have  been  purchased  by  the  different  rail- 
roads or  by  their  subsidiary  coal  companies."^ 
The  railroads  purchasing  coal  companies  included 
the  Delaware  and  Hudson,  the  Pennsylvania 
Railroad,  the  Lehigh  Valley,  the  New  York, 
Ontario  and  Western,  and  the  like. 

The  remaining  independent  operators  were 
brought  into  close  affiliation  with  the  carrying 
railroads  by  means  of  percentage  contracts. 
After  a  long  history  of  conflict  between  the  rail- 
roads and  the  producing  coal  companies,  a  form 
of  contract  was  drawn  up  which  provided  that 
the  coal  company  should  sell  all  of  its  coal  to 
the  contracting  railroad;  that  the  contracting 
railroad  was  to  call  for  this  coal  as  the  condi- 
tions of  the  market  seemed  to  require;  that  the 
call  for  the  coal  should  be  as  equitable  as  pos- 
sible, and  that  for  all  sizes  above  pea,  "sixty- 
five  (65)  per  cent  of  the  general  average  free 
on  board  prices  of  said  sizes  received  at  tide- 
water points"  should  be  paid  by  the  railroads 
to  the  producer. 

These  contracts,  since  modified  by  the  United 
States  Supreme  Court,  gave  stability  to  the  busi- 
ness of  the  producer.      At  the  same  time,  they 

I  "The  Anthracite  Coal  Combination,"  op.  cii.,  p.  85. 


THE     PROBLEM  63 

secured  to  the  coal  operators  an  increase  in  the 
price  which  they  received  for  their  coal.  The 
operators  "practically  surrendered  forever  their 
independence,  agreeing  to  sell  to  the  railroad,  or 
its  subsidiary  coal  company,  their  entire  future 
output,  to  be  delivered  in  such  quantities  and  at 
such  times  as  the  buyer  dictated.  Mr.  Simpson, 
of  the  old  firm  of  Simpson  and  Watkins,  testified 
before  the  United  States  Examiner  in  a  recent 
suit  that  the  railroads  would  not  give  him  a 
contract  for  his  coal,  unless  he  made  the  con- 
tract for  the  life  of  the  collieries."^  The  oper- 
ators seemed  to  have  been  willing  to  enter  into 
these  agreements  because  they  could  thus  secure 
a  higher  return  for  their  coal  than  they  would 
have  been  able  to  secure  through  any  means  of 
independent  marketing  at  their  disposal. 

9.  The  Anthracite  Problem 

The  anthracite  problein  as  it  stands  today, 
may  be  siimmarized  in  these  terms.  A  valuable 
natiu-al  resource,  localized  in  one  small  geographic 
area,  is  depended  upon  by  millions  of  consumers 
and  by  tens  of  thousands  of  workers.  For  years 
this  resource  has  been  the  object  of  constant 
public  attention.  The  consumers  have  clamored 
against  high  prices;  the  workers  have  demanded 
higher  wages  and  better  conditions  of  labor. 
Meanwhile  the  owners  of  the  resource  have  been 
actively  engaged  in  efforts  to  increase  their  profits. 

The  attempts  of  the  owners  of  the  coal  fields 

'"The  Anthracite  Coal  Combination,"  op.  cil.,  p.  93. 


64  ANTHRACITE 

to  secure  larger  profits  have  culminated,  since 
1898,  in  a  combination  which  has  virtual  control 
of  coal  lands,  coal  mines  and  coal-carrying  rail- 
roads. The  coal  land  owners  have  thus  put  them- 
selves in  control  of  the  means  of  marketing  as 
well  as  the  resource  and  the  means  of  producing 
coal. 

Here  is  a  resource  privately  owned.  The 
ownership  of  the  resource,  as  well  as  of  the  means 
of  developing  and  marketing  it,  are  concentrated 
under  the  control  of  one  group  of  interests. 
This  is  the  logical  end  of  Herbert  Spencer's 
reasoning,  except  that,  instead  of  securing  con- 
trol over  an  entire  country,  the  anthracite  inter- 
ests have  secured  control  over  an  entire  industry. 

The  question  now  arises — given  a  natural 
resource  of  wide  public  importance,  privately 
owned  by  one  group  of  interests  which  also  con- 
trols the  means  of  transportation,  what  will 
happen  to  the  consumer  who  uses  the  product 
of  the  monopoly,  to  the  worker  who  sells  his  time 
and  energy  to  the  monopoly,  and  to  the  indi- 
viduals who  participate  in  the  property  ownership 
by  the  monopoly? 


CHAPTER  3 

THE    CONSUMER   AND   ANTHRACITE   PRICES 

1.  The  Consumer's  Point  of  View 

The  consumer  is  vitally  interested  in  the  proper 
use  of  natural  resources.  He  derives  his  liveli- 
hood from  their  products.  His  well-being  depends 
upon  the  quality  of  these  products  and  the  prices 
at  which  he  can  get  them. 

The  consumer's  interest  is  the  largest  and  must 
always  be  the  dominant  interest  in  dealing  with 
any  natural  resource.  Every  member  of  the  com- 
munity is  a  consumer.  Children  and  old  people 
are  consuming  without  producing.  Those  who 
are  engaged  in  productive  work  are  both  consum- 
ers and  producers.  Each  member,  old  and  young, 
in  the  entire  living  population  is  a  unit  in  the  body 
of  the  consuming  public.  The  consumers  are  the 
community.  Anything  which  affects  the  con- 
sumer therefore  affects  the  entire  community. 

The  consuming  public  outlives  any  individual  in 
the  community.  There  are  25,000  people  in  your 
city  today.  Ten  die  and  ten  are  born.  There 
are  still  25,000  people.  Each  of  these  people  is  a 
consumer.  Individuals  come  and  go.  The 
consuming  public  persists. 

The  figures  worked  out  by  expert  mining  engi- 
neers indicate  that  unless  some  adequate  substi- 
tute is  found,  the  consuming  public  during  the 

6  (65) 


66  ANTHRACITE 

next  century  will  depend  more  or  less  upon  anthra- 
cite for  its  supply  of  fuel.  The  personnel  of  this 
pubHc  will  change.  The  body  of  it  will  remain. 
There  will  be  millions  of  people  in  the  United 
States  to  whom  anthracite  Vn^IU  be  a  resoiu"ce  of 
real  and  immediate  significance.  The  anthracite 
problem  as  it  exists  today  in  the  northeastern  cor- 
ner of  Pennsylvania  for  a  long  time  will  bear 
an  intimate  relation  to  the  well-being  of  a  great 
body  of  American  consiimers. 

2.  The  Status  of  the  Consumer 

Everything  that  is  made  is  intended,  directly 
or  indirectly,  for  use.  Any  manufacturer  will 
tell  you  readily  enough  that  he  is  not  in  busi- 
ness for  his  health.  He  spends  his  time  turning 
out  a  product  which  someone  wants.  The  man- 
ufacturer whose  products  supply  no  wants  will 
sell  no  goods.  Manufacturing  is  carried  on  for 
the  purpose  of  giving  people  things  that  they 
desire. 

All  business  is  based  on  the  wants  or  demands 
of  the  consumer.  Coal  is  broken  in  certain  sizes 
because  people  want  those  sizes.  The  price  of 
chestnut  coal  is  higher  than  the  price  of  certain 
other  sizes  because  there  is  a  greater  demand  for 
it  than  for  any  other  of  the  domestic  sizes. 

Unless  someone  wanted  it,  no  coal  would  be 
mined.  At  the  time  when  there  was  no  apparent 
use  for  the  smaller  sizes  of  coal — buckwheat,  rice 
and  dust — they  were  thrown  out  on  the  culm 
dump  with  the  other  refuse  of  the  mine.     As  soon 


PRICES  67 

as  it  was  found  that  these  finer  grades  of  coal  could 
be  used,  they  acquired  commercial  value.  In 
some  cases  the  owners  of  great  culm  dumps  were 
better  off  than  the  owners  of  mines.  The  culm 
was  washed  over  and  the  fine  coal  sold  at  a  good 
profit. 

The  consumer  is  the  objective  point  of  product- 
ive activity.  He  is  more  than  that.  He  is  the 
beneficiary  of  productive  activity.  He  is  even 
more  than  that.  He  is  the  arbiter  of  productive 
activity. 

Every  ptirchase  is  a  vote.  The  consumer  (pur- 
chaser) is  constantly  engaged  in  voting  productive 
activities  in  or  out  of  office. 

At  one  stage  in  the  development  of  society 
everyone  depended  upon  soft  soap  which  was  made 
in  the  home.  At  another  stage  hard  soaps  be- 
came commercially  practicable  and  were  made 
and  sold  in  great  quantities.  At  the  present 
time,  powdered  soaps  are  coming  into  favor. 
Each  time  that  a  consumer  buys  a  washing  pow- 
der in  preference  to  a  hard  soap  he  votes  in  favor 
of  washing  powder  and  against  hard  soap.  There 
was  a  time  when  oatmeal  stood  under  the  grocer's 
counter  in  a  barrel.  Today  it  is  sold  in  pack- 
ages. To  be  sure,  the  cost  is  greater,  but  there  is 
the  advantage  of  greater  cleanliness  and  greater 
certainty  as  to  the  correct  weight.  Each  con- 
sumer who  buys  oatmeal  by  the  package  rather 
than  in  bulk  votes  against  oatmeal  in  bulk  and 
favors  package  oatmeal.  So  effective  has  this  vote 
been  in  recent  times  that  bulk  oatmeal  is  almost 


68  ANTHRACITE 

never  met  with  in  the  large  centers.  In  its  place 
there  are  numerous  brands  of  package  oatmeal. 
The  consumers  have  voted  bulk  oatmeal  out  of 
office. 

The  consumer  need  not  be  intelligent  in  order 
to  vote.  He  need  not  even  be  conscious  that  he  is 
voting.  When  he  puts  down  his  ten  cents  for 
the  package  of  oatmeal  he  makes  the  decision 
which  determines  that  oatmeal  shall  be  wrapped 
in  packages  rather  than  sold  in  bulk. 

No  consxmier  can  escape  voting.  Each  pur- 
chase that  he  makes  registers  his  decision,  even 
though  it  be  an  unconscious  one.  The  con- 
sumer is  thus  able  to  stimulate  one  kind  of  pro- 
duction or  to  retard  another.  He  is  able  to 
make  one  brand  of  goods  succeed  at  the  expense 
of  another.  Advertising  is  the  means  that  the  pro- 
ducer takes  to  make  the  consumer  vote  in  his  favor. 

There  is  a  sense  in  which  the  consiimers  are 
the  dominating  factors  in  the  industrial  world. 
If  the  consuming  public  were  effectively  organ- 
ized, it  might  decide  that  one  brand  of  break- 
fast food  should  remain  on  the  market  and  that 
another  should  go;  that  one  kind  of  clothing 
should  be  worn  and  that  another  kind  should 
be  discarded.  Unorganized  as  it  is,  the  consum- 
ing public  follows  the  fashions  rather  blindly,  but 
none  the  less  effectively.  The  decision  of  the  con- 
sumer to  wear  or  not  to  wear  a  certain  type  of 
hat  determines  whether  the  manufacturers  of 
that  kind  of  a  hat  shall  be  prosperous  or  go 
bankrupt. 


PRICES  69 

3.  The  Rights  of  Consumers 

Consumers  have  certain  rights  as  regards  them- 
selves, as  regards  those  dependent  upon  them, 
as  regards  the  character  of  goods  and  as  regards 
the  price  of  goods.  Some  of  these  rights  are 
well  recognized,  others  are  still  indefinite. 

The  consimier  has  a  right  as  regards  himself 
and  those  dependent  upon  him.  He  has  a  right 
to  know,  for  example,  that  when  he  buys  a  food 
product,  his  health  will  not  be  in  danger  because 
of  poisonous  preservatives.  The  consumer  has 
another  right  entirely  independent  of  his  health 
or  well-being — that  is  his  right  to  have  goods  as 
represented.  The  markets  of  the  East  teem  with 
traders  whose  one  object  in  life  is  to  misrepresent 
their  goods.  Among  them  the  deceit  of  a  cus- 
tomer is  considered  good  business.  This  attitude 
was  reflected  until  very  recently  in  the  well- 
known  precept  of  the  English  common  law 
caveat  emptor — "let  the  buyer  beware!" 

During  recent  times  a  complete"  revolution 
has  taken  place  in  the  relation  of  buyer  and 
seller.  The  seller  places  certain  goods  upon  his 
counter.  If  they  are  misbranded,  he  is  liable 
to  prosecution.  In  the  great  centers  of  trade, 
reputable  merchants  and  manufacturers  stand 
ready  at  any  time  to  make  good  losses  which  the 
consumers  feel  that  they  have  sustained  in  pur- 
chasing goods  that  are  not  what  they  were  repre- 
sented to  be.  The  consumer  is  coming  to  regard 
his  right  to  goods  as  represented  as  one  of  the 
fundamental  rights  in  the  economic  world. 


70  ANTHRACITE 

The  third,  and  by  far  the  most  important  right 
of  the  consumer,  is  his  right  to  goods  at  reason- 
able prices.  So  significant  is  this  right  that  it 
will  be  dealt  with  at  greater  length  in  a  subsequent 
section. 

The  consuming  public,  comprising  the  entire 
community,  is  developing  certain  rights,  and  is 
coming  to  look  upon  them  as  belonging  natur- 
ally to  consumers.  The  consumers  are  not  yet 
conscious  of  either  their  rights  or  their  power. 
Nevertheless  they  are  learning  to  understand 
both.  They  are  insisting  upon  legislation,  de- 
manding reform,  and  above  all  else,  they  are 
interesting  themselves  in  the  prices  of  things. 

4.  The  Obligations  of  Consumers 

With  rights  go  obligations.  Consumers  may 
justly  assert  certain  rights  to  which  they  con- 
sider themselves  entitled.  At  the  same  time, 
as  consumers,  they  necessarily  assume  the  obli- 
gations which  go  with  their  position  as  members 
of  the  consuming  public. 

The  first  obligation  of  the  consiuner  relates  to 
the  kind  of  goods  that  he  buys.  A  man  with  a 
ten-dollar  bill  in  his  pocket  can  direct  the  course 
of  production  within  the  limit  of  ten  dollars. 
For  example,  he  can  vote  in  favor  of  the  manu- 
facturer of  shoes  by  the  purchase  of  a  pair  of 
shoes ;  in  favor  of  a  manufacturer  of  liquor  by  the 
purchase  of  champagne;  in  favor  of  the  manu- 
facturer of  jewelry  by  the  purchase  of  a  watch 
charm.     Hats  and  shoes  are  necessaries;    cham- 


PRICES  71 

pagne  and  watch  charms  are  luxuries.  The 
consumer  is  under  a  blanket  obligation  to  see  that 
the  proper  kind  of  goods  are  produced.  If  the 
community  is  in  need  of  hats  and  shoes,  he  must 
vote  for  hats  and  shoes. 

The  consumer  must  recognize  an  equally  im- 
perative mandate  to  conserve  the  welfare  of  the 
future.  Grant  for  the  moment  that  the  public 
sale  of  alcoholic  liquors  in  a  community  is  dis- 
advantageous to  the  on-coming  generation.  The 
consumer  who  casts  his  vote  for  alcoholic  liquors, 
casts  his  vote  against  the  future  welfare  of  his 
own  community.  The  moment  he  is  convinced 
that  alcohol  will  low^r  standards,  he  must  vote 
against  alcohol  in  favor  of  public  health. 

The  second  obligation  of  the  consimier  is  less 
important.  The  consumer  must  vote  for  the  right 
quality  of  goods.  Every  purchase  of  a  cheap  or 
tawdry  article  is  a  vote  in  favor  of  establishing 
such  standards  in  the  community.  The  conscien- 
tious consumer  will  cast  his  ballot  for  quality. 

The  third  obligation  of  the  consumer  is  in  some 
ways  the  most  important.  The  consumer  must 
cast  his  vote  in  favor  of  reasonable  conditions 
of  production. 

The  conditions  surrounding  the  production  of 
goods  differ  very  widely.  Food,  clothing  and  fuel 
may  be  turned  out  by  men  and  women  who  are 
well  paid  and  carefully  safeguarded  against  the 
risks  incident  to  work  in  their  industry,  or  they 
may  be  underpaid,  oven\^orked  and  forced  to 
face  constant  and  unnecessary  dangers  to  life  and 


72  ANTHRACITE 

health.  Which  of  these  two  producers  shall  the 
consumer  patronize?  If  he  buys  the  goods  pro- 
duced by  the  first,  he  is  voting  for  fair  conditions 
of  production.  If  he  buys  the  goods  of  the 
second,  he  is  voting  for  the  inhuman  conditions 
of  life  and  work.  Such  contrasts  exist  in  many 
industries,  and  between  these  two  extremes  the 
consumer  must  choose. 

The  consumer  who  takes  his  obligations  seri- 
ously has  only  one  path  open.  Whenever  pos- 
sible he  must  make  his  choice  in  a  way  that  will 
banish  every  banishable  evil  from  industrial  life. 
He  must  cast  his  vote  against  child  labor;  he 
must  cast  his  vote  against  the  sweat  shop;  he 
must  cast  his  vote  against  the  exploitation  of 
women;  he  must  cast  his  vote  against  inade- 
quate pay  and  over-work.  In  short,  he  must  cast 
his  vote  against  everything  which  in  any  way 
reflects  unfairness  as  between  industry  and  the 
worker. 

If  the  American  consuming  public  would  recog- 
nize this  obligation  to  the  workers  and  would 
exercise  its  power  by  voting  energetically  against 
bad  working  conditions  and  in  favor  of  good  ones, 
it  could  revolutionize  the  lives  of  millions  of 
toilers. 

5.  Reasonable  Prices 

Among  the  rights  upon  which  the  consumer 
insists,  the  most  tangible  one,  and  the  one  which 
must  attract  the  most  permanent  interest,  is 
the  right  to  reasonable  prices.      The  consumer 


PRICES  73 

may  not  appreciate  the  quality  of  the  goods. 
It  is  often  difficult  or  impossible  for  him  to  know 
personally  about  the  conditions  under  which 
the  goods  were  produced.  He  does  come  into 
contact  with  prices.  Each  time  that  he  pur- 
chases an  article  he  faces  the  price  problem. 

Price  is  the  one  thing  about  goods  concerning 
which  the  consumer  can  have  a  really  accurate 
knowledge.  Price  is  forced  upon  his  attention 
each  time  he  makes  a  purchase. 

The  consumer  has  a  right  and  an  obligation  as 
regards  prices.  His  right  is  the  right  to  goods 
at  a  reasonable  price.  His  obligation  is  the 
obligation  to  pay  a  price  that  will  allow  for  fair 
conditions  of  production.  Provisions  for  health 
and  safety  are  frequently  expensive.  No  matter 
what  they  cost,  the  consumer  must  expect  to  pay 
a  price  that  will  cover  them. 

The  consumer  believes,  and  with  every  color  of 
justice,  that  he  has  a  right  to  goods  at  a  reasonable 
price.  The  difficulty  arises  when  he  attempts  to 
make  a  concrete  estimate  of  what  constitutes 
reasonableness. 

What  is  a  reasonable  price? 

There  is,  of  course,  no  final  way  in  which  such 
a  question  can  be  answered.  There  are  limits, 
however,  within  which  prices  may  be  called  rea- 
sonable and  beyond  which  they  may  be  called 
unreasonable. 

The  difficulty  of  defining  "reasonable"  as 
applied  to  price  is  enhanced  by  the  difference 
that  always  exists  between  the  viewpoint  of  the 


74  ANTHRACITE 

producer  and  the  viewpoint  of  the  consumer. 
The  producer  wants  high  prices.  The  more  he 
gets  for  an  article,  irrespective  of  its  cost  of  pro- 
duction, the  better  he  is  off.  With  the  producer 
high  prices  and  prosperity  are  synonymous. 

The  viewpoint  of  the  consumer  is  exactly 
opposite  to  that  of  the  producer.  The  consumer 
wants  low  prices.  The  less  he  pays  for  an  article, 
the  better  he  is  off.  With  the  consumer,  low 
prices  and  prosperity  are  synonymous. 

Any  examination  of  the  reasonableness  of  prices 
must  take  these  two  points  of  view  into  consider- 
ation. In  the  nature  of  things,  a  price  which 
would  appear  reasonable  to  the  maker  would 
seem  high  to  the  buyer.  At  the  same  time,  the 
price  which  the  buyer  would  regard  as  high  would 
be  looked  upon  by  the  maker  as  low. 

It  seems  impossible,  rmder  the  circumstances, 
to  accept  a  standard  of  reasonableness  set  by 
either  the  producer  or  the  consumer.  Each 
approaches  the  question  from  a  different  angle; 
neither  can  fully  understand  the  reasons  which 
prompt  the  attitude  of  the  other.  There  is 
nothing  for  it  but  to  establish  some  scientific 
method  of  deciding  reasonableness.  Such  a 
method  would  afford  a  price  measure  in  terms  of 
which  the  fairness  of  any  given  price  might  be 
decided. 

6.  Methods  of  Making  Prices 

Prices  may  be  fixed  by  many  different  methods. 
First  of  all,   there  is  the  monopoly  method  of 


PRICES  75 

charging  for  an  article  all  that  can  be  gotten  out 
of  it.  The  phrase  commonly  used  to  describe 
this  monopoly  price  is  taken  from  railroad  nomen- 
clature— "all  that  the  traffic  will  bear."  This 
phrase  means  that  in  making  a  given  rate,  the 
railroad  charges  all  that  it  can  possibly  charge 
and  still  secure  the  traffic.  Where  competition 
is  keen  this  price  would  be  very  near  the  cost  of 
doing  the  business.  It  might  even  be  fixed  at  a 
figure  below  the  cost  of  production  in  individual 
cases.  Where  there  is  no  competition,  the  rate  is 
placed  at  a  figure  so  high  that  the  shippers  will  find 
it  profitable  to  ship,  but  so  that  any  addition  to 
the  rate  would  lead  shippers  to  stop  shipping. 
The  rate  maker  aims  to  get  the  maximum  traffic  at 
the  maximum  rate.     He  is  trying  to  get  all  he  can. 

The  principle  of  monopoly  price  may  be  illus- 
trated roughly  in  this  manner.  A  group  of  inde- 
pendent ice  companies  which  were  in  the  habit 
of  harvesting  a  million  tons  of  ice  a  year  and 
charging  five  dollars  a  ton  for  it,  finds  it  cheaper 
to  harvest  half  a  million  tons  and  charge  ten  dol- 
lars a  ton.  One-half  the  labor  is  saved,  and  the 
net  profits  are  therefore  considerably  greater. 
To  be  sure,  people  may  suffer  or  even  die  because 
of  the  high  price  of  ice.  This,  however,  is  not  a 
matter  with  which  monopoly  concerns  itself. 
The  object  of  monopoly  is  maximum  profits  and 
minimum  expense. 

The  monopolist  fixes  his  price  without  any  ref- 
erence to  the  cost  of  making  the  article.  Thus, 
if  you  are  worldng  in  a  psychological  laboratory, 


76  ANTHRACITE 

you  will  find  it  necessary  to  ptirchase  certain 
appliances.  A  patented  device  which  costs  twelve 
cents  to  make,  sells  for  a  dollar.  If  the  manu- 
facturer is  asked,  "Why  do  you  charge  a  dollar 
for  an  article  that  costs  twelve  cents  to  pro- 
duce?" he  will  reply  that  only  a  few  of  the  articles 
are  made,  and  the  profit  must  necessarily  be  high 
on  that  few,  and  that  besides,  he  has  a  monopoly 
on  the  manufacture  of  the  article,  and  people 
will  pay  a  dollar  for  it  as  readily  as  they  will  pay 
fifty  cents.  Why  then  should  he  not  charge  a  dol- 
lar? The  laboratory  chief,  when  asked  about  the 
matter,  says  that  the  laboratory  needs  these 
appliances,  and  that  there  is  no  other  way  to  get 
them,  except  from  this  firm,  and  therefore  the 
price  demanded  must  be  paid.  The  producer 
has  his  patent  monopoly;  the  consumer  wants 
the  product  and  is  able  to  pay  well  for  it.  The 
result  is  a  price  many  times  the  actual  cost  of 
manufacture. 

Monopoly  prices  are  fixed  with  the  interests  of 
the  monopolist  in  view.  There  is  no  pretense  at 
considering  public  interest.  The  purpose  of 
monopoly  is  to  make  profits — the  higher,  the 
better.  To  be  sure,  a  monopoly  will  not  resort 
to  illegal  methods  in  order  to  make  these  profits. 
It  will,  however,  use  every  legal  means  at  its  dis- 
posal to  increase  dividends. 

7.  Business  for  Profits 

The  supposition  on  which  monopoly  prices  are 
fixed  is  common  to  the  modern  business  world. 


PRICES  77 

The  business  man  is  not  in  business  for  his  health, 
nor  is  he  in  business  in  the  interest  of  his  com- 
petitors or  of  the  people.  He  is  in  business, 
primarily,  to  make  profits.  Perhaps  he  is  presi- 
dent of  a  corporation  in  which  sums  of  money 
are  invested  by  numerous  people,  who  look  to 
him,  as  business  director,  to  return  to  them  a  six 
per  cent  dividend  on  their  investment.  Most 
people  regard  this  dividend  as  legitimate,  and  the 
first  duty  of  the  corporation  president  is  the  duty 
of  making  the  dividend.  If,  in  order  to  make 
this  dividend,  he  must  raise  the  price  of  ice,  bread 
or  coal,  he  is  popularly  justified  in  doing  so.  The 
business  world  puts  profits  first.  The  business 
man  is  taught  to  make  returns  on  his  investment. 
The  way  to  do  this  is  to  keep  a  generous  margin 
between  the  cost  of  making  a  thing  and  its  selling 
price. 

The  business  man  expects  a  fair  return  on  his 
investment.     What  is  an  investment? 

There  is  no  general  agreement  as  to  what  shall 
constitute  an  investment.  Every  enterprise  that 
records  a  capitalization  of  half  a  million  dollars 
does  not  represent  the  investment  of  so  much 
mone}^  Investment  or  business  capital  is  made 
up,  now  in  one  way  and  now  in  another. 

The  capital  behind  many  businesses  has  been 
invested  a  dollar  of  money  for  each  dollar  of  capi- 
tal. There  are  many  businesses,  however,  in 
which  the  capital  stock  is  based,  not  upon  cash 
invested,  but  upon  earning  power.  The  books  of 
a  company  show  that  during  the  past  ten  years  it 


78  ANTHRACITE 

has  been  earning  $300,000  a  year;  $300,000  will  be 
a  6  per  cent  dividend  on  $5,000,000,  therefore 
the  company  may  be  capitalized  at  $5,000,000. 
A  charter  is  secured;  stocks  are  issued  to  the  ex- 
tent of  $5,000,000,  and  the  company,  being  a 
well-managed  concern  and  a  stable  business,  con- 
tinues to  pay  a  regular  dividend  of  6  per  cent  on 
its  capital  stock.  Now,  it  so  happens,  that  in  this 
particular  case,  the  company  controls  a  number 
of  valuable  patents,  and  because  of  this  patent 
control,  it  was  able  to  sell  its  product  at  a  very 
high  price.  The  men  who  established  the  busi- 
ness did  not  invest  more  than  $1,000,000  in  it, 
all  told,  and  the  cost  of  replacing  the  plant  at  the 
time  it  was  capitalized  did  not  exceed  $2,000,000. 
The  difference  between  the  $1,000,000  invested 
and  the  $2,000,000  cost  of  replacement  included 
$1,000,000  worth  of  plant  that  was  built  out  of 
earnings  or  profits.  The  investment  was,  there- 
fore, $1,000,000,  the  value  of  the  plant  was 
$2,000,000,  while  the  capitaHzation  was  $5,000,000. 
In  this  case,  the  organizers  of  the  company 
"capitalized  earning  power." 

The  popular  mind  looks  upon  the  $5,000,000  of 
capital  stock  as  property.  As  a  matter  of  fact,  it 
is  not  tangible  property  at  all,  because  the  total 
value  of  the  tangible  property,  new,  would  not 
exceed  $2,000,000.  The  $5,000,000  represents 
tangible  property  plus  good  will,  monopoly  power 
and  expectancy  of  future  earnings.  It  is  not 
tangible  property,  but  earning  possibility. 

There  is  a  sense,  of  course,  in  which  monopoly 


PRICES  79 

power  is  property.  Since  it  will  earn  dividends, 
and  since  it  may  be  transferred  from  hand  to 
hand,  a  patent  right  may  be  regarded  as  property. 
At  the  same  time,  it  is  not  investment  in  any 
sense  of  the  word,  and  a  very  clear  distinction 
must  be  made  between  the  $1,000,000  which  was 
investment  in  this  plant,  the  $1,000,000  which 
was  taken  from  earnings  and  used  to  build  up 
the  plant,  and  the  $3,000,000  which  represented 
capitaHzed  earning  power. 

It  is  perfectly  conceivable  that  the  earnings  of 
the  plant  might  be  increased  to  $400,000.  For 
example,  it  might  be  true  that  the  prices  charged 
for  the  monopolists'  products  are  not  full  monop- 
oly prices.  They  may  be  represented  by  some- 
thing less  than  the  exercise  of  full  monopoly 
power.  They  are  not  "all  that  the  traffic  will 
bear."  It  might  be  assimied  that  by  increasing 
the  price  of  its  product,  this  concern,  by  advanc- 
ing earnings  to  $400,000  instead  of  $300,000,  could 
issue  another  $1,000,000  of  stock  and  pay  6  per 
cent  upon  it  also.  This  last  million  would  repre- 
sent nothing  less  than  the  exercise  of  monopoly 
power. 

5.  Business  for  Service 

The  "get  all  you  can"  policy  is  not  the  only 
poUcy  that  is  being  followed  in  modem  business. 
There  is  a  large,  and  we  have  every  reason  to 
believe  a  growing,  tendency  for  the  producer  to 
look  upon  his  work  as  a  profession  and  upon 
himself  as  a  professional  man  whose  business  it 


80  ANTHRACITE 

is  to  supply  people  with  the  things  they  need — 
the  best  things  at  the  most  reasonable  prices. 
Such  business  men  try  to  see  how  low  they  can 
keep  prices. 

One  of  the  most  striking  illustrations  of  this 
point  of  view  is  the  attitude  which  the  Ford 
Motor  Company  has  adopted  towards  its  busi- 
ness. The  original  investment  of  the  Ford  Motor 
Company  is  small.  The  actual  value  of  the  plant 
is  vastly  greater  than  this  original  investment. 
The  plant  has  been  built  out  of  earnings,  and  the 
company  might  readily  capitalize  not  only  the 
value  of  the  plant,  but  the  earning  power  of  the 
plant.  For  example,  if  the  Ford  Motor  Com- 
pany's earnings  last  year  were  $18,000,000,  the 
business  could  be  capitalized  at  $300,000,000  and 
pay  a  dividend  of  6  per  cent. 

The  plan  followed,  in  the  case  of  the  Ford  Motor 
Company,  is  exactly  the  reverse  of  this,  however. 
Instead  of  capitalizing  its  earning  power  and  pay- 
ing dividends,  the  company  has  chosen  to  increase 
the  wages  of  its  employees  and  decrease  the  price 
of  its  product  to  the  consumer.  If  the  Ford  Motor 
Company  were  to  capitalize  at  $300,000,000,  and 
were  to  earn  6  per  cent  on  this  capitalization,  it  is 
probable  that  no  one  would  raise  the  least  question 
in  regard  to  the  legitimacy  of  such  a  procedure. 
The  reverse  policy  of  sharing  up  the  profits  of  the 
industry  with  the  employees  and  with  the  pur- 
chasers has  given  rise  to  widespread  commendation. 

The  Ford  scheme  is  a  new  one.  In  the  past, 
and  particularly  during  the  era  of  trust  organiza- 


PRICES  81 

tion  which  followed  the  Spanish-American  War, 
earning  power  was  capitalized  in  every  direction, 
and  great  floods  of  bonds  and  stocks  were  issued 
against  earning  power  as  well  as  against  tangible 
property.  The  business  world  told  itself  con- 
fidently that  it  had  a  right  to  everything  that  it 
could  get.  "All  that  the  traffic  will  bear"  was 
looked  upon  as  a  legitimate  definition  of  business 
profits.  During  this  period  of  business  expansion 
great  profits  were  reaped  by  the  business  interests, 
and  the  basis  was  laid  for  further  profits  by  the 
issue  of  stocks  and  bonds  based  on  earning  power. 

The  Ford  plant  is  a  long  step  in  the  opposite 
direction.  Mr.  Ford  seems  to  look  upon  the 
actual  investment  as  the  legitimate  basis  for  earn- 
ing power.  He  does  not  even  care  to  capitalize 
the  profits  which  have  been  turned  back  into  the 
business.  Instead,  he  aims  to  share  his  prosperity 
with  his  employees  and  ;;he  public  in  the  shape  of 
higher  wages  and  lower  prices. 

The  contrast  may  be  put  in  these  terms.  A 
soap  manufacturer  discovers  a  new  formula  which 
greatly  improves  the  quality  of  his  soap  and 
lowers  the  cost  of  production  by  50  per  cent. 
This  manufacturer  has  been  making  a  reasonable 
profit.  His  new  formula  reduces  the  cost  of  pro- 
ducing a  cake  of  soap  from  3  cents  to  1  cent.  In 
the  past,  his  soap  has  retailed  for  6  cents.  Shall 
he  pocket  the  2  cents  which  his  new  plan  saves 
him,  or  shall  he  give  it  to  the  public  in  the  form  of 
cheaper  soap?  The  answer  of  the  old-time  busi- 
ness world  was  that  he  must  pocket  all  of  the  2 

6 


82  ANTHRACITE 

cents.  The  thought  that  Ues  behind  modem 
business  is  that  he  must  at  least  share  his  2  cents 
with  his  employees,  with  the  pubHc  or  with  both. 
In  other  words,  the  manufacturer  must  say,  "I 
have  perfected  a  means  to  give  the  public  cheaper 
soap,"  with  the  same  pride  that  the  scientist 
says,  "I  have  devised  a  means  for  preventing  the 
spread  of  tuberculosis." 

A  long  distance  intervenes  between  the  atti- 
tude toward  the  present  method  of  doing  business 
and  the  one  suggested  at  the  end  of  the  last  para- 
graph. There  seems  to  be  no  question,  however, 
but  that  the  movement  of  a  part  of  the  business 
world  is  away  from  the  most  barbarous  phases  of 
the  "all  that  the  traffic  will  bear"  doctrine,  toward 
the  idea  of  sharing  with  worker  and  consumer  the 
accruing  advantages  of  industry. 

9.  Prices  and  Earning  Power 

From  the  standpoint  of  the  consiimer,  the 
matter  sums  itself  up  in  these  terms.  If  every 
business  is  to  be  organized  and  managed  on  the 
*'all  that  the  traffic  will  bear"  basis,  the  con- 
sumer must  organize  some  form  of  counter-activity 
that  will  regulate  or  eliminate  monopoly  power. 
Otherwise,  he  will  be  eaten  up  by  the  demands  of 
the  monopolized  industries.  If  all  businesses  were 
built  on  original  investment,  if  there  were  no 
watered  values  in  capitalized  earning  power,  the 
prices  of  most  products  now  sold  in  the  United 
States  would  be  lower  by  many  per  cent  than 
they  are  at  the  present  time. 


PRICES  83 

Take  the  railroads  as  an  illustration.  The 
Interstate  Commerce  Commission  is  at  present 
engaged  in  a  physical  valuation  of  railroad  prop- 
erty. No  one  can  predict  what  the  outcome  of 
this  will  be,  yet  it  seems  very  probable  to  many 
experts  that  the  actual  value  of  the  railroad 
property  today  will  be  equal  to  the  capitalization 
of  approximately  $19,000,000,000.  A  question 
must  be  asked,  however.  How  much  of  this 
$19,000,000,000  of  railroad  property  represents 
investment?  First  of  all,  there  were  the  men 
and  women  who  put  their  money  into  railroad 
projects.  This  money  is  a  legitimate  investment. 
Then  there  were  the  cities  and  states  which  sub- 
scribed to  railroad  securities.  This  money  is  in 
the  nature  of  public  investment.  Then  there 
were  the  numerous  grants  of  agricultural,  timber 
and  mineral  lands  which  were  made  by  the  State 
and  Federal  governments  to  induce  the  railroads 
to  build.  Then,  in  the  fourth  place,  there  were 
the  immense  increases  in  land  values  which  have 
occurred  during  the  past  few  years,  and  which, 
more  than  any  other  single  factor,  have  raised  the 
actual  value  of  much  railroad  property  to  a  point 
approximating  its  capitalized  value.  If  railroad 
interest  and  dividends  were  today  paid  on  the  orig- 
inal cash  investments,  there  could  be  a  very 
considerable  cut  in  freight  and  passenger  rates. 
The  railroads  have  no  intention  of  doing  any 
such  thing,  however.  They  have  capitalized 
their  public  land  grants  just  as  they  have 
capitalized   all   of   their   other   assets,    and    on 


84  ANTHRACITE 

these  assets  they  propose  to  pay  both  interest  and 
dividends. 

The  question  of  monopoly  prices  resolves  itself 
into  the  question  of  the  method  by  which  prices 
are  to  be  determined.  The  unyielding  monop- 
olist wishes  to  charge  everything  that  he  can  get. 
The  consumer  demands  that  prices  be  fixed  at  a 
point  that  will  yield  a  reasonable  return  on  the 
actual  business  investment. 

10.  The  Monopoly  Principle  and  Anthracite 

These  general  considerations  regarding  the 
status  of  the  consumer,  have  a  direct  bearing  on 
the  anthracite  problem.  Anthracite  consumers, 
like  any  other  consumers,  are  the  objective  point 
of  the  productive  process.  Anthracite  coal  is 
produced  in  order  that  it  may  be  consumed.  If 
there  was  no  demand  for  it  there  would  be  none 
produced. 

The  consumers  of  anthracite  have  certain 
rights.  There  is  no  question  regarding  the  adul- 
teration of  anthracite,  nor  can  any  issue  be  raised 
in  connection  with  the  character  of  the  goods. 
The  question  of  reasonable  prices  necessarily 
comes  to  the  fore  as  the  chief  problem  involved 
in  the  anthracite  situation. 

The  consumers'  obligations  in  the  case  of 
anthracite  are  practically  Hmited  to  the  condi- 
tions under  which  the  coal  is  produced.  The 
public,  during  recent  years,  has  taken  a  more  or 
less  effective  stand  in  regard  to  the  living  and 
working    conditions    of    the    anthracite    miners. 


PRICES  85 

The  dramatic  labor  struggles  in  the  anthracite 
region  have  focused  public  attention  on  that  ques- 
tion and  stimulated  in  the  great  body  of  the  con- 
suming public  a  sympathetic  attitude  toward  the 
anthracite  worker. 

11.  Recent  Movements  of  Anthracite  Prices 

The  Bureau  of  Labor  at  Washington  publishes 
figures  showing  the  increase  in  the  wholesale  price 
of  anthracite  coal  since  1890.  In  that  year  chest- 
nut sold  at  $3.35  per  ton;  egg  at  $3.61  per  ton; 
and  stove  at  $3.71  per  ton.  During  the  subse- 
quent years  prices  ranged  over  a  wide  field.  They 
were  lowest  in  1895  and  highest  in  1913.  This 
holds  true  of  each  of  the  different  grades  of  coal. 

The  increase  in  the  price  of  chestnut  has  been 
greater  than  that  of  any  other  size.  This  is  ex- 
plained by  the  rapidly  growing  demand  for  chest- 
nut as  a  kitchen  fuel.  The  wholesale  price  in 
1890  was  $3.35;  in  1913,  $5.31.  Egg  advanced 
in  price  from  $3.61  to  $5.06;  stove  advanced 
from  $3.71  to  $5.06.  The  relative  prices  of  three 
grades  of  anthracite  appear  in  Table  I,  on  the 
following  page. 

The  extreme  fluctuations  in  the  prices  of  these 
prepared  sizes  of  anthracite  coal  occurred  prior 
to  1898.  Since  that  time  there  has  been  an  up- 
ward movement  most  rapid  in  the  case  of  chestnut 
and  least  rapid  in  the  case  of  stove  coal.  The 
movement  is  none  the  less  effective  in  all  cases. 
Between  1898  and  1913  the  price  of  chestnut 
increased  almost  exactly  50  per  cent.      During 


86  ANTHRACITE 

the  same  period,  the  price  of  egg  coal  increased 
40  per  cent  and  the  price  of  stove  coal  33  per  cent. 

Table  I. — Index  Numbers  Showing  the  Relative  Prices 

OF  Certain  Grades  of  Anthracite  Coal,  1890-1913.1 

Year  Chestnut  Egg  Stove 

1890 93.3  100.6  97.8 

1891 96.7  104.4  101.6 

1892 109.7  110.8  109.4 

1893 115.9  107.2  110.5 

1894 98.5  94.3  94.9 

1895 82.9  84.3  82.4 

1896 98.9  98.8  100.0 

1897 103.9  105.7  105.8 

1898 98.8  100.2  100.1 

1899 101.4  93.8  97.6 

1900 108.9  99.7  104.0 

1901 120.4  112.9  113.9 

1902 124.0  121.5  117.6 

1903 134.2  134.3  127.1 

1904 134.2  134.2  127.1 

1905 134.1  134.3  127.1 

1906 135.2  135.3  128.1 

1907 134.1  134.2  127.1 

1908 134.1  134.1  127.1 

1909 134.1  133.2  127.0 

1910 133.9  133.9  127.0 

1911 139.0  133.8  126.7 

1912 146.9  140.0  132.6 

1913 147.8  140.9  133.4 

Previous  to  the  combination  of  1898,  the 
importance  of  which  has  already  been  noted,  the 
price  of  hard  coal  was  subject  to  very  much  the 

I  Wholesale  Prices,  1890-1913.  U.  S.  Bureau  of  Labor  Statistics.     Bulletin 
No.  149.     Washington,  Government  Printing  Office,  1914,  pp.  134-35. 


PRICES  87 

same  extremes  of  variation  that  may  be  noted  in 
the  price  of  bitiiminous  coal  at  the  present  time. 
Thus,  chestnut  coal  was  $3.35  in  1890;  $4.17  in 
1893;  $2.98  in  1895.  The  price  of  egg  coal  was 
$3.03  in  1895;  $3.80  in  1897;  $3.37  in  1899.  The 
price  of  stove  coal  was  $4.19  in  1893;  $3.13  in 
1895;  $4.01  in  1897.  These  figures  typify  the 
price  movement  upon  which  Professor  Jones  has 
so  fully  commented.  Since  1898,  however,  fluctu- 
ations disappear  and  the  climb  of  prices  is  con- 
sistent and  regular. 

The  price  of  anthracite,  like  the  prices  of  many 
other  products,  has  risen  during  the  past  few 
years.  Indeed,  the  operators  have  repeatedly 
alleged  as  one  of  their  reasons  for  increasing  the 
prices,  the  increasing  cost  of  operating  the  mines- 
The  real  question  of  importance,  therefore,  centers,, 
not  in  the  price  of  the  coal,  but  in  the  cost  of  the 
coal.  If  the  law  of  monopoly  price  is  to  prevail 
in  fixing  the  prices  of  anthracite,  the  operators  will 
get  all  that  they  can.  If  some  equitable  basis  for 
prices  is  to  be  maintained,  the  cost  of  production 
must  be  taken  into  consideration  before  the  price 

of  coal  is  fixed. 

i 
12.  The  Cost  of  Producing  Anthracite 

There  has  been  a  great  deal  of  comment  regard- 
ing the  cost  of  coal  production.  Even  after  the 
vast  body  of  data  submitted  at  the  investigation 
made  by  the  Interstate  Commerce  Commission 
and  the  Pennsylvania  Railroad  Commission  has 
been  sifted,  there  remains  some  ground  for  specu- 


^8  ANTHRACITE 

lation.  At  the  same  time,  the  report  made  by 
the  Bureau  of  Labor  following  the  labor  difficulty 
in  1912,  cites  several  detailed  reports  of  the  cost 
of  coal  production  that  are  quite  illuminating. 

Many  consumers  believe  that  the  miner  receives 
a  major  part  of  the  $7  which  they  are  called  upon 
to  spend  for  a  ton  of  coal.  They  have  been  told 
repeatedly  by  the  coal  companies  that  if  the 
wages  of  the  miners  are  raised,  let  us  say  10  per 
cent,  a  corresponding  increase  must  be  made  in 
the  price  of  the  product  in  order  to  recompense 
the  coal  companies  for  the  increased  cost  of  pro- 
duction. As  a  matter  of  fact,  the  mining  costs 
constitute  a  comparatively  small  element  in  the 
price  of  a  ton  of  coal. 

Company  A,  cited  on  page  97  of  the  Federal 
Report  on  Anthracite  Prices,^  is  described  as  "one 
of  those  whose  operating  costs  have  most  largely 
increased  during  the  period  under  consideration." 
In  1904,  according  to  the  figures,  the  cost  of  coal 
at  the  colliery  was  $2,046;  in  1912,  the  cost  was 
$2,215.  In  other  words,  in  1912,  the  8,671,013 
tons  of  anthracite  coal  produced  by  this  com- 
pany cost,  on  the  average,  $2.22  at  the  mine. 
The  company  reported  in  that  year  a  total  of 
27,463  employees.  The  $7-ton  of  stove  coal  pur- 
chased by  the  constimer  in  New  York  or  Phila- 
delphia actually  cost  the  coal  mining  company  a 
little  over  $2. 

A  number  of  items  enter  into  the  cost  of  coal. 
The  actual  mining,  or  cutting  and  loading  coal, 

'"Increase  in  Prices  of  Anthracite  Coal,"  op.  cit.,  p.  97. 


PRICES  89 

cost  in  1912,  54  cents.  Other  labor  costs  inside 
the  mine  included  the  cost  of  maintaining  road- 
way, of  ventilation,  of  repairs,  of  piimping,  of 
"general  expenses,"  "extraordinary  expenses," 
"improvements,"  bring  the  total  labor  cost  up 
to  $1,309.  In  short,  the  actual  cost  of  mining 
the  coal  and  putting  on  the  cars  in  the  mine  is 
only  about  two-fifths  of  the  labor  cost  inside 
of  the  mine.  Supplies,  machinery  and  miscella- 
neous costs  other  than  labor  costs  bring  the  net 
cost  of  coal  inside  the  mine  to  $1,674.  Outside 
the  mine,  the  labor  costs  are  $0,419  and  the  net 
outside  costs  $0,541.  Inside  and  outside  costs 
combined  give  for  the  total  labor  cost  on  the  ton 
of  coal  $1,728,  and  for  all  costs  $2,215. 

This  illustration  is  only  one  of  a  number  of 
instances,  declared  in  the  report  to  be  typical, 
which  the  investigators  brought  to  light  in  the 
course  of  their  researches.  The  coal  at  the  mine 
costs  less  than  $2.25  average,  per  ton. 

These  mine  cost  figures  are  most  generous  in 
the  nimiber  of  items  they  include.  No  effort 
has  been  spared  to  load  on  the  cost  account  every 
item  which  it  might  be  asked  to  carry. 

A  number  of  items  are  included  in  some  of  the 
cost  statements  which  seem  unwarrantably  high. 
For  example,  on  page  104,  under  "general  ex- 
penses," one  company  charges  $0,052  per  ton  of 
coal  for  the  expenses  of  the  New  York  office. 
The  same  company  includes  in  its  charges  such 
fixed  charges  as  "taxes,"  "mine  rents,"  "insur- 
ance," "law  expenses,"  "other  New  York  office 


90 


ANTHRACITE 


expenses,"  "real  estate  department,"  "sinking 
fund"  and  "extraordinary  expenses."  These 
items  combined,  add  $0,306  to  the  cost  of  each 
ton  of  coal.  Even  with  these  additions,  the  total 
cost  of  this  company  per  ton  at  the  mine  was  only 
$2,179. 

The  consumer  who  pays  $7  for  a  ton  of  stove 
coal  distributes  his  money  somewhat  as  follows:^ 


Retailer 

..   $2.00 

$2 .  00  Retailer 

Ton  of] 
Stove    [  $7     • 

Freight 

..   $1.75 

.  $1.75  Freight 

Coal     J 

Mine  Profit 

Cost  of  Selling.  .  . 

..    $1.00  ' 
..   $0.10 

>  $1.10  Operator 

Mine  Up-keep . . . 
Other  Labor 

..   $0.35  ' 
..   $1.25 

.  $2. 15  Mine  Cost 

Mining 

..    $0.55 

The  figures  in  the  foregoing  diagram  are  neces- 
sarily estimates.  They  will  vary  from  one  mine 
to  another  and  from  one  part  of  the  anthracite 
field  to  another.  They  are  typical  rather  than 
specific,  yet  they  give  a  rough  idea  of  the  way 

1  It  should  be  noted  that  the  mine  profit  of  $1  per  ton  applies  only  to  the 
domestic  sizes  of  coal.  Some  of  the  smaller  sizes  are  sold  at  an  apparent  net 
loss,  which,  according  to  one  line  of  reasoning,  shotild  be  borne  by  the  domestic 
sizes. 


PRICES  91 

in  which  the  price  paid  for  a  ton  of  coal  is  divided 
among  the  different  parties  at  interest  in  its  pro- 
duction. The  figures  for  the  mine  costs  are  taken 
from  the  Federal  Report  on  anthracite  prices 
already  referred  to.  The  total  v\^holesale  price  at 
tide-water,  minus  the  freight  rate,  gives  an  amount 
equal  to  the  mine  costs,  plus  the  cost  of  selling, 
plus  the  mine  profit.  The  Federal  Report  on  the 
Production  of  Coal  for  1913,  made  by  Edward 
W.  Parker  (pages  886  and  following),  seems  to 
show  a  mine  profit  on  domestic  sizes  of  about 
$1.00.  The  dift'erence  between  the  wholesale  price 
and  the  retail  price  represents  the  amount  that 
goes  to  the  retailer.  This  amount,  of  course,  is 
not  profits.  All  of  the  expenses  of  the  business 
must  be  taken  out  of  ic.  Unfortunately,  no 
figures  are  at  hand  that  show  what  part  of  this 
$2.00  is  business  costs  and  what  part  is  profit. 
Thus,  while  the  figures  are  approximations  that 
would  not  hold  true  of  this  or  that  particular 
mine,  they  probably  are, true  of  the  anthracite 
mines  in  general. 

The  figures  as  cited  in  the  above  diagram  are 
suggestive.  The  entire  cost  of  the  coal  on  the 
cars,  ready  for  shipment  from  the  mines,  is  only 
a  little  over  $2.00,  or  less  than  one-third  of  the 
price  paid  by  the  consumer.  Of  this  mine  cost, 
only  a  quarter  goes  to  the  man  who  does  the 
mining.  All  other  labor  costs,  including  the 
cost  of  keeping  the  mine  in  repair  and  the  labor 
costs  of  improving  the  property,  in  so  far  as 
the  mine  can  be  improved,  are  equal  to  $1.25. 


92  ANTHRACITE 

The  miner,  together  with  every  form  of  mine 
labor,  therefore  gets  only  $1.80  per  ton,  or 
one-fourth  of  the  total  amount  paid  by  the 
consumer. 

It  is  evident  from  these  figures  that  people  must 
give  over  the  idea  that  the  miner  is  the  chief 
beneficiary  of  the  price  paid  for  coal.  The  mine 
v/orkers  of  all  descriptions  get  only  a  quarter  of  it. 

The  mine  operators  and  the  railroads  together 
get  the  lion's  share  of  the  money  paid  by  the 
consumer  for  his  coal.  Mine  profit,  selling  cost 
and  railroad  freight  rate  cover  $2.85,  or  two- 
fifths  of  the  price  of  the  coal  to  the  consumer. 
This,  it  should  be  remembered,  is  secured  by  the 
coal  owners  and  carriers  after  the  cost  of  keeping 
up  the  mines  (except  taxes,  interest  and  other 
fixed  charges)  have  been  charged  against  mine 
costs.  The  amount  taken  by  the  operator  and 
the  railroad  is  greater  than  the  entire  labor  cost 
of  each  ton  of  coal,  or  even  than  the  total  mine 
cost  of  the  coal. 

When  the  consumer  pays  $7  for  a  ton  of  stove 
coal,  he  is  paying  a  far  larger  part  of  his  money 
to  the  operator,  the  railroad  and  the  retailer  than 
he  pays  to  the  miner. 

13.   The  Cost  of  Getting  Coal  to  Market 

The  relation  of  the  consumer  to  the  price  of 
domestic  sizes  of  anthracite  may  be  stated  in  a 
different  manner.  What  are  the  actual  costs  of 
getting  a  ton  of  stove  coal  to  market? 

The  mine  costs  are  clear.     For  labor  the  cost 


PRICES  93 

is  $1.80;  for  mine  upkeep,  35  cents,  making  a 
total  mine  cost  of  $2.15. 

There  is  a  cost  of  selling  the  coal,  which  is  prob- 
ably about  10  cents.  This  would  bring  the  total 
cost  of  the  coal,  on  the  cars  at  the  mines  and  sold, 
up  to  $2.25. 

The  operating  cost  to  the  railroads  of  carrying 
a  ton  of  anthracite,  for  example,  to  Philadelphia, 
is  apparently  about  50  cents,  varying  somewhat 
with  the  route  taken. ^  Adding  this  cost  to  the 
total  cost  at  the  mines,  it  would  seem  that  the 
actual  cost  of  getting  the  prepared  sizes  of  anthra- 
cite to  the  Philadelphia  market,  including  the  cost 
of  selling,  is  about  $2.75,  or  about  one-half  of  the 
wholesale  selling  price. 

These  are  not  final  costs.  The  coal  companies 
and  the  railroads  must  still  pay  their  fixed  charges. 
These  figures  do  give  some  idea,  however,  of  the 
relation  existing  between  the  amount  that  a  con- 
sumer pays  for  coal  and  the  fraction  of  this  amount 
that  gets  into  the  hands  of  the  men  who  mine  and 
load  the  coal. 

14-  A  Better  Explanation 

No  one  pretends  that  the  price  of  anthracite  is 
fixed  with  relation  to  its  cost  of  production. 
Many  of  the  producing  companies  have  inadequate 
systems  of  cost  determination,  and  the  railroad 
officials  representing  the  anthracite  carriers  have 
always  insisted  that  it  was  impossible  to  make  an 
accurate  analysis  of  traffic  costs  as  applied  to  one 

1  "The  Anthracite  Coal  Combination,"  op.  cit.,  pp.  137-38. 


94  ANTHRACITE 

commodity.  However  true  this  may  be  as  a 
general  proposition,  the  Interstate  Commerce 
Commission  and  the  Pennsylvania  Railroad  Com- 
mission found  it  possible  to  discover  the  costs  of 
anthracite  traffic. 

There  is  another  explanation  of  the  movement 
of  anthracite  prices.  While  costs  have  not  been 
seriously  considered,  monopoly  possibilities  have 
received  increasing  attention. 

Until  1898  the  prices  of  anthracite  fluctuated 
as  extensively  as  did  the  prices  of  bituminous.  In 
1898  an  effective  combination  of  anthracite  car- 
riers was  formed.  Since  that  time  the  price  of 
anthracite  was  held  stable  until  1912.  As  if  by 
common  consent,  all  of  the  anthracite  producers 
carried  out  an  identical  policy.  In  1912,  and 
subsequent  to  the  strike,  the  price  of  coal  was 
advanced  25  cents  per  ton,  and  again  this  was  done 
with  a  truly  astounding  unanimity  by  all  of  the 
large  anthracite  interests. 

The  truth  is  that  the  effective  combination 
organized  in  1898  has  been  doing  what  it  will  with 
prices.  The  price  fluctuations,  which  are  as  great 
in  bituminous  coal  between  1898  and  1913  as  they 
ever  were  during  a  like  period,  have  no  counter- 
part in  anthracite.  Anthracite  prices  display  a 
stability  which  suggests  a  far-reaching  monopoly 
power. 

15.  What  should  the  Consumer  Pay  for  Anthracite? 

Th-ere  is  no  one  answer  to  the  question,  "What 
should  the  consumer  pay  for  anthracite?"     If  a 


PRICES  95 

reasonable  price  is  to  be  charged,  it  must  vary 
with  each  locaHty. 

The  method  of  ascertaining  a  price  that  will 
be  reasonable  in  a  given  locality  may  be  briefly 
indicated.  It  is  understood,  in  the  first  place, 
that  a  reasonable  price  includes  the  cost  of  pro- 
duction, plus  a  reasonable  profit  on  the  actual 
money  investment.  This  would  not  include  a 
return  on  increased  land  values  nor  a  return  on 
stock  issues.  The  basis  of  profits  in  each  case 
must  be  cash  investment.  The  elements  in  such 
a  reasonable  price  would  be  as  follows: 

1.  The  cost  of  taking  coal  from  the  mine. 

Plus  a  fair  return  on  the  actual 
investment. 

2.  The   cost  of   transporting   coal   from 

mine  to  market.  Plus  a  fair  return 
on  the  actual  railroad  investment 
involved. 

3.  The  cost  of  retailing  from  the  railroad 

car  on  the  siding  to  the  consumer's 
cellar.  Plus  a  fair  return  on  the 
actual  investment  in  the  retailing 
business. 

There  is  no  way  of  putting  these  statements 
into  accurate  figures  in  the  present  limited  state 
of  the  public  knowledge  regarding  the  anthracite 
industry.  If  the  figures  suggested  in  Section  13 
of  this  chapter  are  approximately  correct — that 
is,  if  the  ton  of  coal,  from  the  mine  to  the  retailer, 
costs   $2.75   for  operating  expenses,   and  if,   as 


96  ANTHRACITE 

has  been  frequently  asserted,  $1  a  ton  will  market 
coal  from  car  to  cellar — the  operating  costs  on  a 
ton  of  coal  would  not  exceed  $4  in  a  market  like 
Philadelphia. 

The  sums  that  must  be  added  to  these  operat- 
ing costs,  as  representing  a  reasonable  profit  on 
the  investment,  must  be  determined.  There  is 
apparently  no  information  now  published  that 
covers  the  field.  An  intelligent  accountant,  with 
full  power  to  investigate  and  report,  might  throw 
a  great  deal  of  light  on  it  without  much  trouble. 

The  consumers  of  anthracite  are  anxious  to 
pay  reasonable  prices  for  their  coal.  There  is 
just  one  way  to  proceed.  The  facts  must  be 
ascertained  by  men  competent  to  determine  such 
issues.  Until  such  facts  are  a  matter  of  public 
record,  it  is  idle  to  speculate  on  the  probable 
outcome  of  the  investigation.  It  is  worth  not- 
ing, however,  that  there  is  every  indication  that 
the  present  prices  of  anthracite  represent  mon- 
opoly power  rather  than  cost  of  production. 


CHAPTER  4 

THE   WAGES    OF   THE   ANTHRACITE   WORKERS 

1.  The  Economic  Status  of  Anthracite  Labor 

A  VISITOR  to  the  anthracite  coal  fields  would 
never  suspect  that  the  workers  there  were  occupied 
in  developing  one  of  the  richest  of  American 
resources.  The  annual  production  of  only  three 
minerals  and  fuels — pig  iron,  copper  and  bitu- 
minous coal — exceeds  anthracite  in  value,  while 
the  value  of  the  anthracite  coal  mined  each  year 
is  twice  the  value  of  the  gold  and  four  times 
the  value  of  silver  mined  annually  in  the  United 
States. 

Anthracite,  be  it  remembered,  is  not  only  a 
valuable  natural  resource.  Concentrated  in  area 
and  important  as  a  commercial  product,  anthra- 
cite has  been  brought,  imder  the  domination  of  a 
small  but  powerful  group  of  railroad  interests. 

The  anthracite  miner  is  therefore  working  in 
a  region  which,  from  a  standpoint  of  natural 
advantage,  is  extremely  rich;  in  an  industry 
which  produces  a  valuable  and  highly  marketable 
commercial  product;  under  the  control  of  a 
number  of  splendidly  organized  railroads  which 
work  in  substantial  harmony.  All  of  the  advan- 
tages accruing  from  a  modem  business  organiza- 
tion engaged  in  the  developm.ent  of  a  highly 
advantageous   resource   should   be   met   with   in 

7  (97) 


98  ANTHRACITE 

the  anthracite  region.  If  there  is  any  industry 
in  the  United  States  which  should  contain  a 
rich|  promise  of  advantage  for  its  workers,  it  is 
the  anthracite  coal  industry;  yet  the  visitor  to 
that  region  is  brought  face  to  face  with  condi- 
tions of  hardship  that  probably  are  not  exceeded 
by  those  in  any  other  industrial  community  of 
equal  size  in  the  northeastern  section  of  the 
United  States. ^ 

An  examination  of  the  facts  shows  that  anthra- 
cite labor  seems  to  enjoy  no  particular  advantage 
because  of  the  fact  that  it  is  employed  by  a  highly 
organized  industry  in  the  production  of  an  im- 
mensely valuable  commercial  product.  In  other 
words,  the  benefits  which  must  necessarily  accrue 
from  the  peculiar  advantages  of  the  anthracite 
business  do  not  accrue  to  the  anthracite  workers. 

The  most  obvious  method  of  contrasting  the 
status  of  the  anthracite  miner  with  that  of  other 
men  doing  Hke  work  is  to  compare  wages.  The 
figures  that  are  available  do  not  allow  any  very 
accurate  comparison  between  anthracite  wages 
and  the  wages  in  other  industries,  because  since 
1902  there  has  been  no  adequate  statement  of 
anthracite  wages.  An  appeal  to  operators  and 
miners  alike  has  failed  to  provide  statistics  of 
wages  classified  according  to  wage  groups.  Under 
the  circumstances,  the  only  recourse  is  to  wage 
averages. 


>  For  a  description  of  the  anthracite  region,  see  "Anthracite  Coal  Communi- 
ties." Peter  Roberts.  1904;  "The  Coal  Miners."  F.  J.  Wame.  1905;  and  "The 
Coal  Miner,"  E.  A.  Sailers.  1912. 


WAGES  99 

Wage  averages  are,  in  one  sense,  extremely 
unsatisfactory,  because  the  averaging-in  of  the 
higher  paid  and  lower  paid  men  does  not  give 
any  accurate  idea  of  the  amount  actually  received 
by  the  individual  man  under  consideration.  At 
the  same  time,  the  averages  do  show,  for  a  large 
group  of  men,  the  amounts  received.  These 
amounts,  compared  with  similar  averages  for 
other  groups,  give  an  idea  of  the  relation  between 
the  groups  which  are  made  the  subject  of 
comparison. 

The  anthracite  mine  worker  is  not  paid  at  a 
higher  rate  than  the  workers  in  other  forms  of 
mining.  The  only  recent  collection  of  material 
on  mine  wages  was  made  by  the  United  States 
Census  Bureau,  and  published  in  a  special  report 
on  "Mines  and  Quarries,"  1902.  The  figures  are 
very  much  out  of  date,  yet  they  give  some  idea 
of  the  relation  then  existing  between  the  wages 
of  anthracite  and  of  other  miners. 

Table  II. — Per  Cent  Distribution  of  Wage-earners 
According  to  Daily  Wage  Rates  in  the  Production 
OF  All  Minerals  and  of  Certmn  Minerals.' 

All 

Min-  A  nthra-  Bitu-  Pig  Gold  and 

erals,  cite,  minous.  Copper,  Iron,  Silver, 

Rate  per  Day                Per  Per  Per  Per  Per  Per 

Cent  Cent  Cent  Cent  Cent  Cent 

Less  than  51.50 16.4  30.7  8.5  2.5  22.6  2.3 

2.50 61.8  84.8  73,8  54.6  90.1  10.2 

3.50 95.0  96.5  97.6  70.1  99.5  71.7 

14.25  and  over 4  .7  .1  1.5  .1  1.3 

Total  men  employed..  581,728      69.691    280,638      26,007      38,851      36.142 

'  Special  Report  on  "Mines  and  Quarries,"  1902.     Washington,  Government 
Printing  Office,  1905,  pp.  96  and  97. 


100  ANTHRACITE 

This  table  shows  that  one-third  of  the  anthracite 
workers  received  less  than  $1.50  daily;  that  more 
than  four-fifths  of  them  received  less  than  $2.50 
per  day,  and  over  nineteen-twentieths  of  them 
received  less  than  $3.50  per  day.  The  wage 
rates  paid  in  the  pig  iron  industry  are  apparently 
lower  than  those  paid  in  anthracite.  The  v^ages 
for  bituminous,  for  copper  and  for  gold  and  silver 
are  higher.  The  anthracite  wages  are  probably 
modified  by  the  presence  of  a  number  of  breaker 
boys.  This  fact  undoubtedly  accounts  for  the 
large  proportion  of  persons  receiving  less  than 
$1.50  per  day.  However,  anthracite  wages 
appear  at  a  disadvantage  when  compared 
with  the  other  principal  mineral  industries  in 
1902. 

These  figures  must  not  be  taken  too  seriously. 
The  census  officials  note  the  extreme  difficulty 
of  getting  satisfactory  wage  facts.  Moreover, 
the  wages  in  Pennsylvania  and  California  cannot 
legitimately  be  compared  unless  some  note  is 
made  of  the  differences  in  the  cost  of  living. 
Though  not  at  all  conclusive,  these  facts  suggest 
that  the  anthracite  miner  enjoys  no  peculiar 
advantage  because  of  the  character  of  the  in- 
dustry in  which  he  is  working. 

Some  later  and  more  specific  figures  lead  to 
the  same  conclusion.  The  Secretary  of  Internal 
Affairs  of  the  State  of  Pennsylvania,  in  his  report 
for  1912,  Part  III  (pp.  321-22),  shows  the  fol- 
lowing figures  of  average  yearly  earnings  for 
anthracite  miners: 


WAGES  101 

Table  III. — Average  Number  of  Wage-earners  Emplo\'ed 
IN  THE  Anthracite  Coal  Mining  Industry,  with  Aver- 
age Yearly  Earnings  and  Average  Daily  Wage. 

Average 
No.  of 

Wage-  Average  Average 

earners  Yearly  Daily 

Employed  Earnings  Wage 

Contract  miners 43,201  $728.84  $3.54 

Miners' laborers 33,292  495.92  2.40 

Other  inside  men 48,024  541.23  2.63 

Outside  workmen 29,554  526.88  2.56 

Breaker  employees 16,238  358. 17  1 .  74 

The  contract  miners,  in  1912,  received  an 
average  v\^age  of  over  $3.50  per  day.  At  the  same 
time,  the  mine  laborers,  inside  men  and  outside 
men  received  average  wages  of  about  $2.50  per 
day,  or  in  terms  of  yearly  earnings,  about  $525 
a  year. 

It  is  interesting  to  note  that  the  number  of 
miners  and  of  the  other  inside  men  is  about 
equal.  So  is  the  nimiber  of  mine  laborers  and 
of  outside  workmen.  These  four  groups  make 
up  the  bulk  of  the  mine  employees.  With  the 
exception  of  the  contract  miners,  .  their  annual 
earnings  (1912)  were  in  the  neighborhood  of  $525. 

A  comparison  between  the  wages  of  Pennsyl- 
vania bituminous  and  Pennsylvania  anthracite 
workers  may  be  made  from  this  same  report. 
Such  a  comparison  shows  that  in  1912  the  bitu- 
minous miners  as  a  group  earned  a  higher  return 
than  the  anthracite  miners.  The  higher  earn- 
ings of  the  bituminous  workers  are  due,  in  part, 
to  the  higher  average  number  of  days  in  oper- 


102  ANTHRACITE 

ation.  Thus  the  bituminous  mines  reported 
268  days  in  operation,  while  the  anthracite 
mines  reported  only  206.  An  examination  of 
the  average  daily  wages  shows  that  the  anthra- 
cite miner  makes  more  per  day  than  the  bitu- 
minous miner,  while  the  inside  and  outside  work- 
men make  about  the  same  in  either  case.  The 
position  of  the  anthracite  miner  differs  from  that 
of  the  bituminous  miner.  The  anthracite  miner 
is  in  one  sense  an  employer,  since  the  mine  laborers 
work  for  him.  The  bituminous  miner  works  for 
himself  or  in  partnership  with  another  miner. 

Following  are  the  wage  figures  for  bituminous 
miners : 

Table  IV. — Average  Number  of  Wage-earners  Employed 
IN  THE  Bituminous  Coal  Mining  Industry,  showing 
Average  Yearly  lEarnings  and  Average  Daily  Wage.^ 

Average 

No.  of  Average  Average 

People  Yearly  Daily 

Employed  Earnings  Wage 

Miners  (pick) 54,178  $674.04  $2.52 

Miners  (machine) 54,158  653.72  2.44 

Other  inside  workmen  over  16  years.  30,485  708.84  2.65 

Outside  workmen  over  16  years 21 ,489  630 .96  2 .  35 

Coke  workers 12,004  610.22  2.07 

Where  like  employments  are  compared,  as 
of  the  inside  men  who  make  roads,  repair  tim- 
bering, drive  mules,  handle  motors,  and  of  the 
outside  men  who  are  carpenters,  engineers,  black- 
smiths, dumpers,  it  will  be  found  that  the  aver- 

1  "Annual  Report  of  the  Secretary  of  Internal  Affairs,"  Part  III,  1912,  pp. 
327-28. 


WAGES  103 

age  daily  wages  in  anthracite  and  in  bituminous 
mining  are  about  the  same,  while  the  greater 
number  of  days  worked  makes  the  annual  wage 
of  the  bituminous  worker  $100  a  year  higher 
than  the  wage  of  the  anthracite  worker. 

There  is  no  evidence  to  show  that  the  wages 
of  the  anthracite  workers  are  higher  than  the 
wages  of  workers  in  other  mining  industries.  On 
the  contrary,  there  are  facts  which  suggest 
that,  if  anything,  the  wages  of  anthracite  workers 
are  lower,  in  certain  particulars,  than  the  wages 
of  some  other  miners. 

2.  Anthracite  Risks 

Much  of  the  argument  before  the  Coal  Strike 
Commission  was  intended  to  show  that  the  coal 
mining  industry  is  an  industry  of  peculiar  risk, 
and  that  those  who  take  up  the  work  of  coal 
mining,  being  employed  in  a  particularly  hazardous 
industry,  should  be  paid  in  proportion  to  the 
hazards  involved.  The  Commission  summed  up 
its  opinion  regarding  the  hazards  of  the  anthra- 
cite industry  by  stating:  ""We  find  that  it  should 
be  classed  as  one  of  the  dangerous  industries  of 
the  country,  ranking  with  several  of  the  most 
dangerous.  The  statistics  so  far  available  .  .  .  . 
do  not  show  a  greater  hazard  than  obtains  in  some 
other  occupations,  notably  in  the  fisheries  and  in 
those  of  switchmen  and  freight-train  crews  on  our 
railroads.     Still,  the  requirements  are  exacting."^ 

J  "Report  of  the  Anthracite  Coal  Strike  of  1902."  Washington,  Government 
Printing  Office,  1903,  p.  51. 


104  ANTHRACITE 

If  this  statement  is  correct,  the  wage  of  the  an- 
thracite workers  should  reflect  these  unusual  risks. 

The  accident  rate  for  the  anthracite  mines  is 
extremely  high.  The  figures  for  1913  showed 
that  out  of  175,310  employees,  there  were  624 
fatal  accidents,  or  3.56  fatal  accidents  per  1,000 
employees.  The  fatal  accidents  per  1,000,000 
tons  of  coal  produced  were  6.81.^  The  report  of 
the  Interstate  Commerce  Commission  for  the 
year  ending  June  30,  1913  (Statistical  Abstract 
of  the  United  States,  1913,  p.  284),  shows  3,635 
employees  killed,  out  of  a  total  of  1,716,380.  The 
rate  of  mortality  in  the  anthracite  industry  is 
therefore  almost  twice  as  high,  taking  all  of  the 
employees  into  consideration,  as  is  the  rate  in 
the  railroad  industry. 

The  Anthracite  Strike  Commission  referred 
specifically  to  the  risks  of  railroad  switchmen, 
and  freight  trainmen.  The  figures  available  do 
not  give  the  accident  rates  for  these  particular 
groups.  They  do,  however,  give  the  facts  for 
certain  larger  groups,  which  may  be  compared 
with  those  men  who  are  occupied  with  the  actual 
operations  of  mining.  The  figures  for  1913  in 
the  Annual  Report  of  the  Department  of  Mines, 
Part  I  (p.  52),  show  that  the  niimber  of  miners 
employed  was  44,346;  fatal  accidents,  286;  fatal 
accidents  per  1,000  miners  6.45;  number  of 
miners'  laborers  employed  was  33,973;  fatal  acci- 
dents,   148;    fatal    accidents    per    1,000    miners' 

1  "Report  of  the   Department  of  Mines  of  Pennsylvania,"  Part  I,   1913, 
Harrisburg,   1914,  p.  75. 


WAGES  105 

laborers,  4.36;  average  number  of  days  worked, 
242.  It  is  impossible  to  make  an  acciirate  com- 
parison between  these  figures  and  the  railroad 
figures,  because  it  is  not  clear  exactly  what  per- 
centage of  the  railroad  accidents  referred  to 
trainmen.  The  figures  do  show,  however,  that  in 
1912,  there  were  318,329  enginemen,  firemen, 
conductors  and  other  trainmen.  The  number  of 
employees  killed  in  collisions,  derailments,  "mis- 
cellaneous train  accidents"  and  "other  accidents 
in  connection  with  railroad  operation,"  "includ- 
ing employees  not  on  duty"  w^as  3,231,  or  10.1 
per  1,000  trainmen.  The  railroad  crews  pre- 
smnably  worked  about  300  days  a  year  (25  per 
cent  more  than  the  time  worked  by  the  anthra- 
cite miners).  Some  allowance  should  be  made 
in  the  calculation  for  employees  killed  who  were 
not  trainmen.  This  would  reduce  the  ratio  of 
10.1  per  1,000  somewhat.  Reducing  this  ratio 
by  20  per  cent,  to  make  allowance  for  the  less 
number  of  worldng  da>s,  it  would  seem  that  the 
fatal  accident  rates  to  men  in  railroad  train  crews 
were  only  slightly  higher  than  the  rates'  for  contract 
miners  and  considerably  higher  than  the  rates  for 
mine  laborers. 

There  can  be  little  question  that  the  anthracite 
industry  is  a  high  risk  industry,  particularly  for 
the  men  who  are  engaged  in  getting  out  the  coal. 
To  what  extent  is  this  high  risk  reflected  in  the 
wages  of  the  anthracite  workers? 

The  average  yearly  earnings  of  railway  em- 
ployees are  rather  difficult  to  determine.      The 


106  ANTHRACITE 

Interstate  Commerce  Commission  reports  the 
total  number  of  employees  of  each  grade  and  the 
total  amount  paid  in  wages  to  these  employees 
by  the  railroads.  Thus,  for  example,  in  1912, 
in  the  Eastern  District^  there  were  30,760  engine- 
men,  31,892  firemen  and  66,346  trainmen.  Con- 
ductors (whose  wages  are  slightly  lower  than 
those  of  enginemen  and  considerably  higher  than 
those  of  firemen)  are  excluded  because  there  is 
no  occupation  in  the  anthracite  industry  which 
compares  in  any  way  with  that  of  the  conductor. 
Their  wages  rank  next  to  the  wages  of  engineers. 
The  average  yearly  earnings  of  these  men,  as 
shown  by  the  Commission  figures, ^  are:  engine- 
men,  $1,522;  firemen,  $901;  other  trainmen, 
$940.  It  will  be  seen  very  readily  that  the  rail- 
way employees  are  compensated  on  a  scale  far 
above  the  scale  of  the  anthracite  miners.  If  the 
amounts  of  skill  and  technical  knowledge  required 
of  the  engineman  and  the  contract  miner  are  ap- 
proximately the  same,^  some  sort  of  a  comparison 
may  be  made  between  the  two.  It  would  appear 
that  the  engineman  gets  twice  as  much  as  the 
contract  miner.  The  fireman  and  other  train- 
men, compared  with  inside  workmen,  mule  driv- 
ers, switch  tenders,  road  menders  and  the  like, 
show  yearly  earnings  almost  twice  as  great  as  the 
yearly  earnings  of  miners'  laborers  and  inside  men. 

1  The  Eastern  District  will  be  used  as  a  comparison  because  the  anthracite 
mines  are  in  this  district. 

2  Annual  Report  for  1912,  pp.  28  and  29. 

3  To  date  the  engineman  is  a  more  highly  educated  and  perhaps  a  more 
skilled  man. 


WAGES  107 

There  is  one  fact  that  must  not  be  lost  sight  of. 
The  miner  is  working  undergroimd.  The  condi- 
tions surrounding  his  work  are,  in  a  sense,  dis- 
agreeable. He  is  working  in  the  dark.  He  is 
working  often  in  damp  places.  Frequently  the 
chamber  is  filled  with  dust.  The  railroad  em- 
ployee is,  on  the  other  hand,  always  above  ground. 
With  the  exception  of  the  enginemen  and  firemen, 
the  work  is  not  particularly  dirty  or  disagreeable. 
Furthermore,  the  hours  of  the  railroad  employees 
are  extremely  short.  It  would  seem  that  no  un- 
biased person  would  hesitate  for  a  moment 
between  railroading  and  coal  mining,  as  far  as 
the  relative  agreeableness  of  the  occupations  is 
concerned.  The  figures  show  that  the  risk  of  the 
underground  men  is  almost  as  high  as  that  of  the 
railroad  employees.  Nevertheless,  the  earnings 
of  anthracite  miners  are  only  one-half  the  earn- 
ings of  railroad  men  doing  work  of  an  approxi- 
mately similar  grade. 

3.  Anthracite  Wages  and  Wages  in  Other  Industries 

The  anthracite  wages  may  be  compared  with 
the  wages  in  other  trades  employing  men.  The 
comparison  is  made  in  these  terms  because  the 
industries  in  which  women  and  children  are 
employed  usually  report  lower  wage  figures  than 
the  industries  in  which  men  alone  are  employed. 

The  Annual  Report  of  the  Secretary  of  Internal 
Affairs  for  Pennsylvania,  Part  III,  1910,^  gives 
average  yearly   earnings  for  anthracite  and  bi- 

1  Since  that  date  most  of  the  wage  data  have  been  omitted  from  the  report. 


108  ANTHRACITE 

tuminous  workers  and  for  workers  employed  in 
a  number  of  other  Pennsylvania  industries.  The 
number  of  days  worked  by  the  anthracite  mines 
was  226;  by  the  bituminous  mines,  264.  In^ 
other  words,  this  year  was  an  average  year  in' 
both  industries.  The  average  yearly  earnings 
in  the  anthracite  mines  were:  miners,  $711; 
miners'  laborers,  $468;  other  inside  men,  $527; 
outside  workmen,  $541.  In  the  bituminous  mines 
the  average  yearly  earnings  were:  pick  miners, 
$588;  machine  miners,  $537;  other  inside  work- 
men, $641;   outside  workmen,  $518. 

Compare  these  figures  for  miners  with  the  earn- 
ings in  certain  other  industries  where  large  num- 
bers of  men  are  employed. 

Table  V. — Average  Yearly  Earnings  in  Certain 
Pennsylvania  Industries,  1910. 

Average 
No.  of  Men       Yearly 
Itidustry  Employed      Earnings 

Pig  iron 16,771  $626 

Steel  production 11,319  693 

Rolling  mills 131,430  678 

Tin  and  temeplate 10,240  779 

Cement 10,882  527 

Machinery 16,385  633 

Locomotives 36,202  718 

Only  one  industry  (cement)  reports  earnings 
of  less  than  $600.  Every  group  of  miners  with 
the  exception  of  anthracite  contract  miners  re- 
ceived annual  earnings  of  less  than  $600.  The 
general  level  of  wages  seems  to  be  lower  in  mining 


WAGES  109 

than  in  the  other  great  man-employing  manu- 
facturing industries  of  Pennsylvania. 

Similar  figures  are  available  in  the  Report  on 
Statistics  of  Manufactures  in  Massachusetts, 
1911,  page  2. 

Table  VI. — Average  Yearly  Earnings  in  Certain 
Massachusetts  Industries,  1911. 

No.  of  Men       Yearly 
Industry  Employed     Earnings 


Cars  and  shop  construction 5,152 

Electrical  machinery 14,393  605 

Leather,  tanning  and  finishing 9,742  566 

The  Massachusetts  figures,  like  those  for  Penn- 
sylvania, seem  to  show  that  the  large  manu- 
facturing industries  employing  men  pay  average 
yearly  earnings  as  high  as  the  earnings  received 
by  the  anthracite  contract  miners  and  consider- 
ably higher  than  the  earnings  of  the  miners' 
laborers  and  inside  and  outside  workmen.  The 
wage  figures  published  by  the  New  Jersey  Bureau 
of  Statistics  yield  similar  results. 

There  are  employed  around  the  outside  of  the 
mine  large  numbers  of  men — blacksmiths,  car- 
penters, mechanics,  firemen,  common  laborers  and 
the  like.  The  wages  of  this  group  average  about 
$525.  The  machinists,  carpenters  and  "other 
shop  men"  employed  by  the  railroads  in  the 
Eastern  District  are  $881,  $736  and  $687  respec- 
tively. (Annual  Report,  Interstate  Commerce 
Commission,  1912,  p.  29.)  Here  again  the  wage 
rate  seems  to  be  lower  in  the  anthracite  than  in 
other  man-employing  industries. 


no  ANTHRACITE 

As  far  as  the  relative  wages  of  anthracite  miners 
and  other  workers  in  occupations  of  a  similar 
grade  are  concerned,  it  would  seem  that  the  bal- 
ance is  in  favor  of  the  workers  in  other  occupa- 
tions. Despite  the  high  risks  of  mining,  most 
other  occupations  employing  men  in  large  numbers 
pay  higher  wages  or  wages  equally  high.  When 
a  comparison  is  made  between  anthracite  and 
occupations  of  equal  risk,  like  the  railroad  in- 
dustry, the  evidence  is  overwhelmingly  against 
anthracite  wages. 

4.  Anthracite  Wages  and  the  Labor  Market 

The  figures  show  that  anthracite  wages  differ 
little  from  wages  in  other  industries  that  are 
operated  under  similar  conditions.  If  there  is 
any  difference,  it  is  against  the  anthracite  mine 
worker.  This  same  point  might  have  been  argued 
deductively  in  view  of  the  fact  that  in  the  United 
States,  as  in  any  other  open  labor  market,  wages 
are  fijced  by  the  laws  affecting  the  entire  labor 
world,  and  not  specifically  for  any  industry. 

The  prospective  anthracite  miner  must  choose 
between  working  in  an  anthracite  or  in  a  bitu- 
minous mine;  between  working  as  a  contract 
miner  or  as  a  track  layer;  between  working  in 
the  mines  and  working  in  a  grocery  store;  be- 
tween working  in  a  mine  and  handling  baggage 
for  a  local  express  company.  The  same  grade  of 
work,  all  other  things  being  equal,  will  pay  about 
the  same  rate  of  return  in  any  one  of  a  group  of 
neighboring  industries.     The  common  laborer  in 


WAGES  111 

a  certain  district  is  paid  $1.50  per  day  whether 
he  spikes  down  rails  for  the  raikoad  or  shovels 
gravel  for  the  local  contractor.  In  many  cases, 
the  existence  of  unions  fixes  the  rate  of  wages. 
In  any  case,  the  laws  of  the  labor  market  or  the 
rules  of  the  unions  make  a  rate  for  labor,  not 
for  the  particular  industry  in  which  the  person 
is  employed,  but  for  the  kind  of  work  he  is  doing. 

This  being  true,  no  one  is  surprised  to  find  that 
the  anthracite  miner  is  paid  a  wage  approximately 
the  same  as  the  wages  of  other  men  doing  similar 
work.  Indeed,  when  the  comparison  is  made 
between  the  railroad  industry  and  the  anthracite 
coal  industry,  one  fact  must  be  borne  in  mind, 
that  among  the  best  established  and  most  con- 
servative trade  unions  in  the  United  States,  are 
the  railway  brotherhoods.  Years  of  hostility  and 
of  aggressive  diplomacy  have  finally  placed  these 
unions  in  a  position  where  they  can  make  and 
enforce  effective  demands  against  the  employing 
railroads.  There  is  probably  no  group  of  indus- 
tries in  the  country  where  the  tinionization  is 
more  complete  or  more  effective.  The  result  is 
the  high  wages  already  noted,  and  it  is  to  be 
assumed  that  if  the  anthracite  miners  had  an 
equally  effective  union,  they  woidd  secure  equally 
high  wages,  provided  they  could  win  as  much  public 
attention  and  public  sympathy  as  the  railroad 
brotherhoods  have  won. 

The  anthracite  coal  operator  does  not  ask  him- 
self, "How  much  will  I  be  able  to  pay  John 
Strzynski?"      Instead  he  asks,   "For  how  much 


112  ANTHRACITE 

will  John  enter  my  employment?"  The  rate  of 
wages  that  John  will  demand  in  the  anthracite 
industry  is  fixed  very  largely  by  the  rate  of  wages 
in  the  general  labor  market. 

Fact  and  logic  alike  lead  to  the  conclusion  that 
the  anthracite  miner  enjoys  no  particular  eco- 
nomic advantage  because  he  is  an  anthracite  miner. 
The  fact  that  he  is  employed  on  a  wonderfully 
rich  natural  resource  yields  him  no  additional 
income.  He  receives  no  share  at  all  in  the 
prosperity  which  goes  with  natural  resource 
monopoly. 

5.  The  Adequacy  oj  Anthracite  Wages 

Turn  for  a  moment  from  the  comparison  of 
anthracite  with  other  wages,  and  ask  a  different 
question.  Are  the  wages  of  anthracite  miners 
adequate  ? 

This  question  bears  no  relation  to  other  indus- 
tries. It  confines  the  issue  to  the  anthracite 
industry  alone.  When  the  anthracite  miners 
present  demands  to  the  operators  for  increased 
wages,  they  may  base  their  contention  on  one 
of  three  propositions.  First,  they  may  argue 
that  their  wages  are  lower  than  the  wages  of  other 
men  doing  similar  work.  Second,  they  may 
argue  that  they  are  not  receiving  a  fair  share 
of  the  product  which  they  are  instrumental  in 
creating.  Third,  they  may  argue  that  their 
wages  are  inadequate.  The  first  two  reasons 
have  already  been  disposed  of.  The  third  one 
is  now  up  for  discussion. 


WAGES  113 

The  adequacy  of  a  particular  wage,^  like  any 
other  scientific  question,  must  be  discussed  in  a 
spirit  of  honest  truth-seeking.  On  all  sides  the 
problem  of  wage  adequacy  is  leading  to  endless 
and  often  to  bitter  controversy  between  employ- 
ers and  wage-earners,  who  usually  base  their  con- 
tention that  wages  are  too  high  or  too  low  upon 
tradition  or  prejudice  rather  than  upon  facts. 
The  result  is  dissension  and  misunderstanding. 
The  problem  of  wage  adequacy  should  be  ap- 
proached scientifically.  First,  the  scientist  exam- 
ines the  wage  facts;  second,  he  decides  upon 
some  standard  by  which  wage  adequacy  may  be 
measured;  and  third,  he  compares  the  prevailing 
rate  of  wages  with  that  standard  in  order  to 
determine  the  adequacy  of  wages. 

There  are  three  propositions  which  are  funda- 
mental in  any  consideration  of  wages: 

1.  Industry  must  pay  a  wage  sufficient 

to   maintain   the   efficiency   of   its 
workers. 

2.  Society  must  oppose  any  wage  that 

leads  to  poverty,  hardship- or  social 
dependence. 

3.  Wages   must  be  sufficient   to   enable 

the  worker  and  his  family  to  live 
like  self-respecting  members  of  the 
community. 
These  statements  are  generally  accepted.      It 
seems  evident  that  unless  industry  pays  wages 

.    V  This  argument  appeared  originally  in  the  "Annals  of  the  American  Acad- 
emy," May,  1915. 

8 


114  ANTHRACITE 

that  will  maintain  efficiency,  its  labor  force  must 
necessarily  deteriorate.  It  seems  equally  evident 
that  unless  society  insists  on  a  wage  sufficient 
to  prevent  poverty,  hardship  and  inefficiency, 
the  family,  the  school,  the  state  and  every  other 
social  institution  will  suffer.  At  the  same  time, 
if  progress  is  to  be  made,  wages  must  be  sufficient 
to  provide  for  self-respect,  while  they  stimulate  men 
to  activity.  So  long  as  the  present  social  system 
prevails  the  man's  wage  must  be  a  family  wage. 
The  home  is  looked  upon  as  the  basic  social  in- 
stitution. Each  man  is  expected  to  make  a  home 
and,  having  made  it,  to  earn  a  living  that  will 
permit  the  wife  to  devote  her  time  and  energy 
to  the  care  of  the  home  and  of  the  children. 
The  mother's  duty  calls  her  to  preside  over  the 
home.  The  father's  duty  calls  him  to  secure  a 
wage  sufficient  to  keep  his  family  on  a  basis  of 
physical  health  and  social  decency. 

The  average  family  as  shown  by  the  census 
figures  contains  somewhat  less  than  five  people. 
If,  however,  there  is  eliminated  from  the  census 
figures  the  famiUes  consisting  of  one  person  and 
of  two  persons — that  is,  families  in  which  there 
are  no  children — the  average  family  will  consist 
of  nearly  six  persons.  Among  the  foreigners, 
who  make  up  the  bulk  of  the  anthracite  workers,^ 
the  famihes  are  considerably  larger  than  among 
the  Americans. 

Some  unit  of  family  size  must  be  adopted  in 

'  The  Secretary  of  Internal  Affairs  for  Pennsylvania,  in  his  Annual  Report, 
Part  III,  1912,  p.  322,  gives  53,441  American  and  86,997  foreign  anthracite 
mine  workers. 


WAGES  115 

any  discussion  of  the  family  adequacy  of  wages. 
The  family  most  frequently  used  in  recent  social 
studies  consists  of  a  man,  wife  and  three  children 
under  fourteen  years  of  age.  Such  a  family 
corresponds  in  size  with  the  average  American 
family.  The  children  are  too  young  to  work 
for  wages  and  the  mother  should  be  in  the  home 
taking  care  of  the  children,  not  working  outside. 
The  situation  in  the  anthracite  field  would  seem 
to  call  for  a  somewhat  larger  standard  family 
than  that  of  three  children.  For  the  purpose  of 
the  present  study,  four  children  will  be  regarded 
as  the  normal  or  type  family  for  the  anthracite 
regions. 

6.  The  Anthracite  Wage  Scale 

A  discussion  of  wage  adequacy  begins  neces- 
sarily with  an  analysis  of  wages.  What  is  the 
anthracite  wage? 

The  figures  available  showing  the  wages  actually 
paid  in  the  anthracite  regions  are  meager  in  the 
extreme.  There  is,  first  of  all,  the  statement  of 
average  yearly  earnings  and  average  daily  wages, 
published  by  the  Secretary  of  Internal  Affairs 
(1912,  Part  III,  page  322).  These  wage  figures, 
upon  which  comment  has  already  been  made, 
are  unsatisfactory  because  they  appear  in  the 
form  of  averages.  They  show  briefly  that  during 
the  year  1912,  when  there  were  206  working  days, 
the  average  yearly  earnings  of  the  contract  miners 
were  $729;  of  miners'  laborers,  $496;  of  inside 
workers,  $541;   outside  workers,  $527. 


116  ANTHRACITE 

The  only  really  satisfactory  figures  on  wages 
in  the  anthracite  region  appear  in  the  report  of 
the  Anthracite  Strike  Commission,  and  relate  to 
the  year  1901.  During  that  year  the  average 
annual  earnings  of  contract  miners  "ranged  be- 
tween $550  and  $600.  Perhaps  it  would  be  safe 
to  put  the  average  at  $560"  (p.  50).  A  typical 
scale  of  annual  earnings  for  1901  was  furnished 
by  the  Lehigh  Valley  Coal  Company  and  pub- 
lished in  the  Report  of  the  Commission  (p. 
178). 

Table  VII. — Annual  Earnings  of  Contract  Miners  Work- 
ing Throughout  the  Year  of  1901,  and  Average  Days 
on  which  Miners  Worked,  Classified  by  Annual 
Earnings,  for  the  Lehigh  Valley  Coal  Company.^ 


Classified  Annual  Earnings  Miners 

$1,000  or  over 10 

$900  or  under  $1,000 10 

or  under  $900 33 

or  under  $800 93 

$600  or  under  $700 204 

$500  or  under  $600 295 

$400  or  under  $500 176 

$300  or  under  $400 76 

$200  or  under  $300 16 

Under  $200 10 


Average 923         236         100.0 


Days  on 
which 
Miners 
Worked 

Per  Cent 
of  Total 
Miners 
Reported 

254 

1.1 

252 

1.1 

258 

3.6 

250 

10.1 

249 

22.1 

238 

31.9 

221 

19.1 

206 

8.2 

185 

1.7 

159 

1.1 

1  This  report  includes  only  such  miners  as  worked  in  their  respective  collieries 
throughout  the  year,  and  whose  names  appeared,  for  some  days,  at  least,  on 
pay  rolls  of  each  month  in  the  year. 


WAGES  117 

Tables  published  on  subsequent  pages  of  the 
report  for  the  Lehigh  and  Wilkes-Barre  Coal 
Company,  the  Philadelphia  and  Reading  Coal 
and  Iron  Company,  the  Delaware,  Lackawanna 
and  Western  Railroad  Company  and  other  coal 
companies,  show  approximately  the  same  facts. 

A  study  of  this  table  shows  that  one-third  of 
all  the  miners  receive  between  $500  and  $600, 
while  one-fifth  receive  between  $600  and  $700 
and  another  fifth  between  $400  and  $500.  Ap- 
proximately three-quarters  of  these  miners  were 
earning  annually  between  $400  and  $700. 

A  considerable  modification  must  be  made  in 
these  figures  in  order  to  allow  for  the  wage 
changes  which  have  occurred  since  they  were 
compiled.  The  average  number  of  days  worked 
per  year,  during  the  last  few  years  is  higher  than 
the  figures  shown  in  this  statement  by  five  or 
six  days,  although  in  1913  the  mines  worked  257 
days.  The  earnings  also  have  increased.  The 
wages  of  the  miners  were  raised  10  per  cent  in 
1902,  and  again  10  per  cent  in  1912,  so  that  the 
wage  figures  given  in  this  table  would  have  to  be 
increased  by  a  slight  margin  to  allow  for  an 
increase  in  the  number  of  working  days  and  by 
about  21  per  cent  to  allow  for  the  increase  in 
wage  rates. 

This  difference  is  shown  by  the  difference  in 
average  earnings.  The  Commission  found  the 
earnings  of  contract  miners  to  be  somewhere 
between  $500  and  $600.  At  the  present  time 
the  average  earnings  of  contract  miners  are  in 


118  ANTHRACITE 

the  neighborhood  of  $700.  This  would  repre- 
sent an  increase  of  some  20  per  cent  since  1901. 

The  contract  miners  constitute  only  a  fraction 
(about  one-quarter)  of  the  total  number  of  anthra- 
cite workers.  The  average  annual  earnings  of 
the  other  workers  in  the  mines  appear  to  be 
from  $150  to  $200  less  than  the  average  annual 
earnings  of  the  contract  miners,  Unfortiinately, 
the  Commission  published  no  figures  showing 
classified  earnings  among  other  than  contract 
miners.  If  these  facts  were  available,  it  would 
add  greatly  to  the  clarity  of  the  issue. 

Are  these  wages  adequate?  Do  the  amounts 
paid  by  the  anthracite  industry  to  its  employees 
enable  them  to  support  a  family  decently  ?  Three 
phases  of  the  matter  will  be  considered: 

1.  The   adequacy   of   wages   to   provide 

health  and  decency  for  a  man,  wife 
and  four  children  under  fourteen 
years  of  age. 

2.  The  adequacy  of  wages  in  terms  of 

the  business  accounting  and  busi- 
ness practice  employed  by  the 
anthracite  companies. 

3.  The  adequacy  to  meet  current  social 

obligations  and  social  standards. 

7.   The  Anthracite  Wage  and  Physical  Efficiency 

The  adequacy  of  wages  may  be  tested  in  terms 
of  the  health  and  decency  which  are  involved  in 
the  maintenance  of  physical  efficiency.      If  in- 


WAGES  119 

dustry  is  to  support  its  workers,  if  society  is  to 
see  to  it  that  families  are  not  forced  to  depend 
upon  the  community,  wages  must  be  sufficient  in 
amount  to  enable  the  wage-earners  to  buy  health 
and  decency.  At  the  present  time  the  wages 
paid  to  a  considerable  portion  of  the  anthracite 
workers  are  insufficient  to  permit  decent  family 
living. 

A  number  of  attempts  to  ascertain  the  cost  of 
a  decent  standard  of  living  have  been  based  on 
the  assiunption  that  physical  health,  education 
up  to  the  age  of  fourteen  and  the  other  minimum 
requirements  of  m_odern  American  life  were  in- 
cluded in  the  term  "decency."  . 

There  is  a  certain  minimum  of  food,  clothing, 
shelter  and  the  other  necessaries  of  life  below 
which  physical  health  and  social  decency  are 
impossible.  That  minimum  exists  in  terms  of 
bread  and  butter,  shoes,  overcoats,  medical 
attendance  and  school  books.  It  is  fixed  by  the 
demands  of  nature  and  by  the  standards  of 
society,  wholly  independent  of  cost  or  price; 
therefore,  any  discussion  of  the  cost  of  a  decent 
living  begins  with  an  analysis  of  the  various 
items  which  comprise  living  decency.  The 
amount  of  food  required  by  the  man  or  by  his 
family  can  be  fixed  with  scientific  accuracy.  The 
amount  of  clothing  is  not  susceptible  of  such  an 
accurate  statement,  but  it  can  be  designated  in 
terms  of  a  certain  number  of  garments  per  year. 
Most  students  of  the  standard  of  living  have 
agreed  that  three  or  four  rooms  are  necessary  to 


120  ANTHRACITE 

house  a  family  of  five  people  decently.  They 
have,  likewise,  made  an  allowance  for  medical 
attendance,  for  saving,  for  insurance  and  for 
recreation. 

The  ordinary  family  with  an  income  of  less 
than  $1,000  a  year  devotes  about  two-fifths  of 
its  expenditures  to  food.  The  food  question 
may  be  handled  with  comparative  ease,  because 
modem  science  has  given  a  fairly  satisfactory 
basis  for  computing  the  food  necessities  of  an 
individual  or  of  a  family. 

The  ordinary  man,  doing  moderate  physical 
work,  requires  approximately  3,500  heat  imits  of 
energy  per  day.  Unless  they  are  supplied  in 
his  food,  he  must  ultimately  become  devitalized 
through  lack  of  proper  nourishment.  A  question 
might  well  be  raised  as  to  whether  the  work 
of  the  man  in  or  about  the  anthracite  mine  is 
not  of  a  character  to  require  an  increased  quota 
of  energy  units.  Some  of  the  occupations  are, 
of  course,  much  more  strenuous  than  others. 
On  the  whole,  the  probabilities  seem  to  be  rather 
in  favor  of  a  somewhat  higher  ratio  than  3,500. 
However  this  may  be,  3,500  calories  will  be 
accepted  for  the  time  being  as  a  standard. 

An  adult  man  requires  3,500  units  of  energy; 
an  adult  woman  requires  eight-tenths  as  much. 
For  the  convenience  of  discussion,  a  family  upon 
which  this  study  will  be  based  includes  a  boy  of 
twelve,  a  girl  of  ten,  a  girl  of  seven,  and  a  boy 
of  five.  These  children  require  respectively, 
seven-tenths,    six-tenths,    five-tenths,    and   four- 


WAGES  121 

tenths  as  much  as  an  adtdt  man.  The  family 
taken  together  would,  therefore,  represent  a  con- 
suming power  equal  to  that  of  four  adult 
men.^ 

A  number  of  standard  of  living  studies  have 
placed  varjang  estimates  upon  the  cost  of  3,500 
heat  units  per  day.  The  Federal  Government 
dietitians  in  1907  agreed  that  physical  efficiency 
could  not  be  maintained  by  families  spending  at 
the  rate  of  22  cents  per  man  per  day.  Since 
1907  there  has  been  an  increase  of  23  per  cent 
in  food  prices,  which  would  increase^the  mini- 
mum limit  to  27  cents.  This  is  the  minimum 
estabHshed  by  the  New  York  Association  for 
Improving  Conditions  of  the  Poor,  and  by  the 
New  York  State  Factory  Investigating  Com- 
mittee. The  Bureau  of  Standards  of  New  York 
City,  after  reviewing  these  and  other  facts, 
accepts  a  standard  of  $7,304  per  week  (27  cents 
per  day,  for  their  family  was  $7  per  week).^ 

These  figures  refer  to  food  prices  in  New  York, 
where,  according  to  the  British  Board  of  Trade 
Report  and  to  other  evidence,  a  poor  man  can 
buy  his  food  more  cheaply  than  in  the  outlying 
districts.  An  examination  of  the  price  schedules 
issued  by  the  Bureau  of  Labor  suggests  that 
prices  in  the  anthracite  regions  differ  little  if 
any  from  those  in  other  parts  of  the   Middle 

1  For  fuller  details  regarding  the  methods  of  estimating  the  dietary,  see 
"Financing  the  Wage-earner's  Family,"  Scott  Nearing,  New  York,  B.  W. 
Huebsch,  1913,  Chapter  2,  Section  7. 

2  Report  on  the  Cost  of  Living  for  an  Unskilled  Laborer's  Family  In  New 
York  City,  1915,  p.  13. 


122  ANTHRACITE 

Atlantic  States,  They  are,  therefore,  probably 
at  least  as  high  as  those  for  New  York. 

The  Federal  study  made  in  New  England  and 
the  Southern  States  during  1908-09  fixed  the  cost 
of  food  per  man  per  day  at  26  cents  for  New 
England  and  24  cents  for  the  Southern  States. 
From  1909  to  1914  the  prices  of  food,  rated 
according  to  the  average  consumption  in  working- 
men's  families  for  the  North  Atlantic  States,  in- 
creased by  one-fifth.  If  the  estimates  made  in  the 
Federal  study  were  correct,  the  food  cost  in  1914 
would  be  approximately  30  cents  per  man  per  day. 

There  has  been  a  considerable,  and  it  would 
seem  a  legitimate,  question  concerning  the  ade- 
quacy of  the  Chapin  diet.  The  diet  adopted  in 
the  Federal  study  certainly  seems  more  reason- 
able.'- It  would  be  conservative,  therefore,  to 
accept  28  cents  per  man  per  day  as  a  basis  for 
estimating  the  food  needs  of  a  family  in  the 
anthracite  regions.  The  food  requirements  of 
the  family  of  four  for  a  day  would  therefore  be: 


Father        =  1.0  X  28c. 

= 

.28 

Mother      =  0.8  X  28c, 

= 

.224 

Boy  of  12  =  0.7  X  28c. 

= 

.196 

Girl  of  10  =  0.6  X  28c. 

= 

.168 

Girl  of  7     =  0.5  X  28c. 

= 

.14 

Boy  of  5     =  0.4  X  28c. 

= 

.112 

$1.12 

This  equals  $7.84  per  week,  or  $408  per  year, 

1  "  Financing  the  Wage-earner's  Family,"  Scott   Nearing,  0^),  c»t.,  Chapter 
2,  Section  8. 


WAGES  123 

If  recent  dietary  studies  are  correct,  $408  per 
year  should  buy  enough  food  to  keep  the  anthra- 
cite mine  worker,  his  wife  and  four  children  in 
physical  health. 

A  comparison  m.ay  be  made  at  this  point 
between  this  food  estimate  and  the  estimates 
submitted  to  the  Anthracite  Coal  Strike  Com- 
mission in  1902.  The  Report  states  (p.  199) : 
the  "average  quantity  of  principal  articles  of 
food  consumed  per  family"  in  the  anthracite 
region  for  1902,  was  $275.14.  Between  1902 
and  1914,  the  cost  of  the  principal  articles  of 
food,  according  to  the  United  States  Bureau  of 
Labor,  increased  about  39  per  cent.  Thirty- 
nine  per  cent  added  to  the  Strike  Commission 
estimate  would  give  a  total  of  $382.44.  This 
estimate,  however,  is  for  the  "principal  articles" 
of  food,  and  includes  families  of  all  sizes.  Such 
a  statement  would  leave  open  the  probability 
that  incidental  articles  of  food  added  to  the  cost 
of  the  "principal  articles"  would  bring  the  food 
cost  for  a  family  of  six  very  near  the  estimate 
here  set  down,  $408. 

The  second  largest  item  in  the  family  budget 
is  the  rent  cost.  Students  of  the  standard  of 
living  have  assumed  that  a  family  of  six  should 
have  not  less  than  four  ordinary  rooms  in  order 
to  maintain  health  and  decency.  A  four-room 
house  in  the  smaller  towns  of  the  anthracite 
region  costs  about  $80  a  year.  In  the  larger 
towns  and  cities  the  cost  is  about  $130  per  year. 

The  next  considerable  item  in  the  budget  is 


124  ANTHRACITE 

clothing,  and  on  this  item  there  is  a  wide 
diversity  of  opinion.  Chapin,  in  his  New  York 
study,  allowed  %33  per  year  for  the  man's  cloth- 
ing; $23  for  the  woman's  clothing;  $15  for  cloth- 
ing each  girl  and  $12  for  clothing  each  boy. 
There  was  an  additional  allowance  for  soap  and 
laundry  utensils.  On  such  a  basis  the  family 
which  we  are  considering  would  spend  $110  for 
clothing.  The  New  York  Bureau  of  Standards 
(1915)  places  the  clothing  item  at  the  same  figure 
as  Dr.  Chapin.  The  Federal  study  adds  about 
one- third  to  the  Chapin  estimate.  If  the  Chapin 
estimate  is  accepted,  it  is  a  bare  minimum. 

The  additional  items  of  expenditure  which  are 
ordinarily  met,  appear  in  the  following  list,  with 
amoimts  set  after  them  equal  to  the  amounts 
prescribed  in  the  Federal  study  for  a  cotton  mill 
town  in  Massachusetts. 

Fuel  and  light $24. 00 

Doctor  and  medicine 13 .  98 

Insurance 20.80 

Amusement 15 .  60 

Church 10.40 

Newspapers,  etc 8 .  84 

Incidentals 26 .  00 

Total $119.62 

These  amounts,  it  should  be  noted,  are  for  the 
most  part  lower  than  the  allowances  made  for 
like  objects  by  the  New  York  Bureau  of  Stand- 
ards. Carfare  is  omitted.  It  is  a  necessary  part 
of  the  budget  in  many  cases. 


WAGES  125 

Summing  up,  the  costs  of  physical  health  and 
decency  for  a  family  of  six  in  the  anthracite  region 
would  be : 

Food $408 

Rent 80 

Clothing 110 

Additional  items 120 

Total $718 

The  rent  item  here  used  is  for  villages.  In  the 
cities  $50  must  be  added  for  rent,  bringing  the 
cost  to  $768.  This  simi — $768 — the  cost  of  decent 
living  for  a  family  of  six  persons  in  an  anthracite 
city — is  an  estimate.  Accurate  information  can- 
not be  obtained  until  a  first-hand  investigation 
is  made  in  the  anthracite  regions.  The  point 
that  should  be  enforced  is  not  the  $768,  but  the 
fact  that  there  is  some  minimum  of  subsistence 
below  which  health  and  decency  are  impossible. 
An  investigation  may  show  that  $768  is  too  high — 
then  the  amount  must  be  lowered;  or  that  $768 
is  too  low — then  the  amount  must  be  increased. 
There  is  a  minimum  cost  of  living  decency  in  the 
anthracite  regions.  At  the  earliest  possible  mo- 
ment it  should  be  determined  by  a  careful  investi- 
gation. Until  that  minimum  is  ascertained  there 
can  be  no  final  adjustment  of  wages  that  will  be 
either  tolerable  or  equitable. 

Meanwhile  the  $768  estimate  for  the  anthracite 
regions  may  be  compared  with  the  standard  of  liv- 
ing studies  made  in  recent  years.  In  New  York 
City,  for  example,  Chapin  estimates  the  cost  of 


126  ANTHRACITE 

decency  at  from  $800  to  $900  for  a  family  of  five 
persons.  In  Fall  River,  Mass.,  the  Federal  study 
makes  an  estimate  of  about  $750;  for  Buffalo  the 
estimate  is  $850;  for  Chicago  it  is  $800.^  The 
most  recent  estimate,  made  after  a  careful  study 
by  the  New  York  Bureau  of  Standards,  sets  the 
cost  in  New  York  City  at  $840. 

The  Fall  River  estimate  ($750)  is  perhaps  most 
comparable  with  the  situation  in  the  anthracite 
■fields.  The  population  of  Fall  River  in  1910  was 
119,295;  the  population  of  Scranton  in  the  same 
year  was  129,867;  and  of  Wilkes-Barre  67,105; 
of  McKeesport  42,692;  of  Shenandoah  25,774. 
Thus  two  of  the  large  anthracite  towns  correspond 
somewhat  in  population  with  Fall  River.  The 
food  costs  in  the  anthracite  region,  as  shown  by 
the  reports  on  retail  prices,  published  by  the 
United  States  Bureau  of  Labor,  do  not  differ 
materially  from  other  sections  in  the  eastern  part 
of  the  United  States.  The  rent  cost  for  Fall 
River  was  about  the  same  as  that  for  the  cities 
of  the  coal  regions  ($130  per  year).  Other  items 
of  expense,  such  as  clothing,  fuel  and  light,  health, 
insurance,  etc.,  do  not  differ  in  the  two  places. 
It  would  seem,  therefore,  that  with  the  exception 
of  the  clothing  item,  which  was  estimated  at  a 
rather  high  figure  in  Fall  River  ($136.80),  there 
should  be  a  fairly  accurate  correspondence  between 
the  requirements  of  a  family  in  the  two  places. 
The  fact  should  be  borne  in  mind  that  the  Fall 
River  study  was  based  on  a  family  of  five,  and 

1  "Financing  the  Wage-earners*  Family,"  Scott  Nearing,  op.  cii.,  Chapter  3. 


WAGES  127 

this  study  is  assuming  a  family  of  six.  The  fact 
should  be  further  emphasized  that  all  of  the 
studies,  with  the  exception  of  that  of  the  Bureau 
of  Standards,  were  made  from  four  to  isix  years 
ago.  During  that  time  the  cost  of  living  has  in- 
creased considerably. 

How  does  this  figure  ($718  for  villages  and  $768 
for  cities)  compare  with  the  wages  paid  to  anthra- 
cite workers?  In  so  far  as  averages  are  an  index 
of  wages,  many  of  the  contract  miners  receive  a 
wage  of  $800  or  more.  The  laborers,  inside  and 
outside  workers,  with  average  daily  wages  of  $2 
to  $2.50,  would  be  able  to  earn  $750  a  year  only 
by  working  a  full  year  of  306  days.  The  largest 
number  of  days  worked  by  the  anthracite  miners 
in  recent  years  was  257  days,  and  that  was  well 
above  the  average  of  the  five-year  period. 

Many  contract  miners  are  apparently  in  receipt 
of  annual  earnings  that  will  provide  living  decency 
for  a  family  of  four  young  children.  The  great 
bulk  of  anthracite  workers,  however,  seem  to  be 
in  receipt  of  wages  that  will  not  buy  such  Hving 
decency. 

There  are  many  ways  in  which  the  miner  may 
maintain  conditions  of  living  decency.  He  may 
refrain  from  marrying  or  from  having  children; 
his  wife  may  take  boarders;  when  his  children 
grow  older  they  may  contribute  to  the  family 
income;  his  wife  may  work  at  some  regular  occu- 
pation ;  he  may  find  extra  work  outside  of  mining 
towns;  or  he  may  supplement  the  family  income 
with  a  cow,  pigs,  chickens  or  a  truck  patch.    All 


128  ANTHRACITE 

these  are  possibilities.  Nevertheless,  the  obliga- 
tion remains  upon  industry  to  pay  a  Hving  wage  to 
its  workers,  and  the  bald  fact  of  a  wage  scale 
largely  below  the  cost  of  decent  family  living 
stares  every  man  with  young  children  square  in 
the  face. 

From  the  standpoint  of  social  well-being,  every 
man  in  the  anthracite  region  who  is  receiving  a 
wage  that  is  insufficient  to  buy  physical  health 
and  decency  for  his  family  of  young  children  is 
inadequately  paid.  How  many  such  men  are 
there?     Future  investigations  alone  will  show. 

8.  The  Anthracite  Wage  as  a  Business  Proposition 

The  wages  paid  by  the  anthracite  industry  to 
a  great  body  of  its  workers  are  inadequate  to  pro- 
vide health,  efficiency  and  decency  for  a  moderate- 
sized  family.  They  are  even  more  inadequate 
when  they  are  considered  from  the  standpoint  of 
up-to-date  business  practice. 

Many  a  successful  business  man,  who  is  con- 
fident that  "the  workers  are  paid  all  that  they 
are  worth,"  and  that  "wages  are  far  too  high, 
anyway,"  has  never  stopped  to  analyze  wages 
from  a  strictly  business  point  of  view.  The  wage- 
earner  is,  in  reality,  a  business  man.  His  place  of 
business  is  his  home.  The  object  of  his  business 
activity  is  the  rearing  of  a  family  in  good  health 
and  with  a  generous  supply  of  education.  To 
this  end,  the  worker  labors  during  most  of  his  adult 
life. 

Business  men  have  worked  ardently  to  safe- 


WAGES  129 

guard  business  interests.  They  have  talked  a 
great  deal  about  the  importance  of  business 
stability;  of  conservatism  in  finance;  of  the 
returns  due  a  man  who  risks  his  wealth  in  a  busi- 
ness venture ;  and  of  the  fundamental  necessity  of 
maintaining  business  on  a  sound  basis.  After 
centuries  of  experiment  they  have  evolved  what 
they  regard  as  a  safe  and  sane  method  of  financial 
business  procedure.  Every  successful  business 
man  tries  to  live  up  to  the  following  well-estab- 
lished formula : 

First.  He  pays  out  of  his  total  returns,  or  gross 
receipts,  the  ordinary  costs  of  doing  business — 
materials,  labor,  repairs  and  the  like.  These 
payments  are  known  as  running  expenses  or  up- 
keep. 

Second.  After  up-keep  charges  are  paid  he 
takes  the  remainder,  called  gross  income,  and  pays 
out  of  it  the  fixed  charges — taxes,  insurance, 
interest  and  depreciation.^ 

Third.  The  business  man,  having  paid  all  of 
the  necessary  expenses  of  doing  business  (the 
running  expenses  and  the  fixed  charges),  has  left 
a  fund  (net  income)  which,  roughly  speaking,  is  the 
profits  of  the  business.     Out  of  this  net  income. 


1  A  depreciation  charge  is  one  that  is  made  against  the  wearing  out  of  capital. 
A  paper  maniifacturer  buys  a  machine  for  which  he  pays  $1,000.  Experience 
tells  him  that  this  machine  will  wear  out  in  ten  years.  Therefore  the  manufac- 
turer sets  aside  each  year  a  sum  which  at  the  end  of  ten  years  will  equal  $1,000 
(a  new  machine).  In  this  way  the  business  man  keeps  his  capital  intact. 
While  the  individual  machines,  tools  and  the  like  do  wear  out,  the  accounts  of 
the  business  are  so  kept  that  these  pieces  of  capital  will  be  automatically 
replaced  when  they  are  too  old  for  use.  The  depreciation  charge  is  recognized 
everywhere  as  a  legitimate  and  necessary  fixed  charge  on  business. 

9 


130  ANTHRACITE 

dividends  are  paid,  improvements  and  extensions 
of  the  plant  are  provided  for. 

Fourth.  The  careful  business  man  increases  the 
stability  of  his  business  by  adding  something  to 
his  surplus  or  undivided  profits. 

This  formula  may  be  stated  in  terms  of  anthra- 
cite bookkeeping.  Very  few  of  the  coal  mining 
companies  make  any  satisfactory  public  statement 
of  accounts.  Here  is  one  that  will  illustrate  the 
principle  involved.^ 

Table  VIII. — Statement  of  Operations  of  the  Lehigh 
AND  Wilkes-Barre  Coal  Company,  1912. 

Gross  earnings $18,742,623 

Total  expenses^ 14,982,263 

Net  income $3,760,361 

Deductions 

Interest $814,390 

Sinking  Fund 460,000 

$1,274,390 

Surplus  for  the  year $2,485,971 

Dividends 1,197,625 

Total  surplus,  June  30,  1912 $3,683,596 

The  expenses  of  doing  business  were  $3,750,000 
less  than  the  receipts.  Even  after  interest,  div- 
idends and  $500,000  for  a  sinking  fund  had  been 
paid  out,  more  than  $1,000,000  remained.    This 

1  "Poor's  Manual  of  Industrials,"  1913,  p.  706. 

2  Includes    colliery  [improvements,    $261,181;    royalties,   J341,089;     taxes, 
J719,469;  and  "value  of  coal  sold  from  stock.  $1,469,365." 


WAGES  131 

sum,  added  to  the  surplus  accumulated  from  pre- 
vious years,  left  the  company,  at  the  end  of  the 
year,  with  over  $3,500,000  of  "surplus." 

The  profits  in  the  anthracite  business  go  very 
largely  to  the  railroad  interests,  and  since  the 
railroad  accounts  are  clearer  than  those  of  the 
coal  companies,  a  statement  of  anthracite  rail- 
road accounting  will  serve  as  a  further  illustration 
of  the  methods  of  sound  business  practice  accepted 
by  the  anthracite  owners.  The  operating  statis- 
tics of  the  Delaware,  Lackawanna  and  Western 
Railroad  for  1912  are  reported  in  Poor's  Manual 
of  Railroads,  1914,  p.  193. 

Table  IX. — Operating  Statistics  of  the  Delaware, 
Lackawanna  and  Western  Railroad,  1912. 

Gross  earnings $37,564,5 1 1 

Total  expenses 24,146,423 

Net  earnings 13,418,088 

Other  income 6,054,567 

Gross  income $19,472,655 

Deductions: 

Taxes $1,771,980 

Rentals 5,847,278 

Interest  on  bonds 6,486 

Renewals  and  betterments 1,720,698 

Miscellaneous 84,242 

Dividends 6,028,800 

Total  deductions $15,459,484 

Surplus  for  the  year 4,013,171 

Total  per  cent  earned  on  stock. . .  33 .  17 


132  ANTHRACITE 

The  bookkeepers  of  the  Lackawanna  begin  with 
the  total  returns  or  gross  earnings  of  $37,000,000. 
From  these  they  deduct  the  expenses  of  carrying 
on  the  business.  To  the  net  earnings  which 
remain  they  add  incidental  income  from  divi- 
dends, rentals,  other  properties,  etc.  The  total  is 
gross  income.  Observe  that  in  the  operations  of 
this  road,  a  third  of  the  gross  earnings  appears 
as  net  earnings,  and  the  gross  income  of  the  road 
is  equal  to  half  the  gross  earnings.  From  gross 
income  is  deducted  taxes,  rentals  and  interest. 
These  are  the  fixed  charges,  obligations  which 
must  be  met  if  the  business  is  to  continue.  From 
gross  income  the  bookkeepers  also  deducted 
$1,750,000  for  renewing  and  improving  the  prop- 
erty of  the  road,  as  well  as  $6,000,000  for  dividends. 
After  all  of  the  necessary  deductions  had  been 
made,  $4,000,000  (an  amount  equal  to  11  per  cent 
of  the  gross  earnings)  remained  as  surplus,  which 
the  road  lays  aside  for  a  rainy  day  or  a  special 
dividend,  as  circumstances  may  dictate. 

Like  every  carefully  handled  business,  the  Lack- 
awanna— 

1.  Paid  its  running  expenses. 

2.  Paid  its  fixed  obligations. 

3.  Divided  up  its  profits. 

4.  And  kept  a  nest  egg. 

The  year  1912  is  not  an  exceptional  year  in  the 
history  of  the  Lackawanna.  From  1905  to  1912 
the  per  cent  earned  on  the  stock  varied  from  22 
per  cent  in  1906  to  53  per  cent  in  1909.  The 
amount  paid  in  dividends  was  $1,838,000  in  1898. 


WAGES  133 

It  remained  at  this  figure  until  1903.  From  1904 
to  1908  the  dividend  payments  were  about 
$5,000,000  per  year.  In  1909  the  dividend  rate 
was  85  per  cent,  including  a  special  dividend  of 
75  per  cent.  The  total  dividends  paid  that  year 
were  $22,861,586.  In  1910,  $6,000,000  in  divi- 
dends was  paid,  and  in  1911,  $16,399,200. 

The  showing  made  by  the  Lackawanna  is  in  one 
sense  exceptional,  because  of  the  high  dividends 
paid  by  that  road.  On  the  other  hand,  the 
method  of  carrying  on  business  is  typical  of  the 
method  pursued  by  every  soimd  business  organiza- 
tion in  the  United  States.  Here,  for  example, 
are  the  operating  statistics  of  the  Lehigh  Valley 
Railroad,  another  anthracite  carrier. 

Table   X. — Operating   Statistics   of   the   Lehigh   Valley 
Railroad  for  1913.i 

Gross  earnings $43,043,372 

Operating  expenses 29,107,820 

Net  earnings ^. 13,935,552 

Other  income 2,023,545 

Gross  income $15,959,097 

Deductions : 

Taxes,   rentals,   interest   on   bonds, 

miscellaneous $7,197,268 

Dividends 6,060,800 

Adjustments 1,079,500 

Total  deductions $14,337,568 

Surplus  for  the  year $1,621,529 

Total  surplus,  July  1 $25,066,231 

1  "Poor's  Manual,"  1914,  p.  263. 


134  ANTHRACITE 

The  dividend  rate  and  total  dividend  payments 
of  the  Lehigh  Valley  are  lower  than  those  for  the 
Lackawanna.  Nevertheless,  the  same  general 
principles  hold  good.  Expenses  are  paid  out  to 
total  earnings.  The  balance  must  be  sufficient  to 
meet  the  necessary  fixed  charges,  to  pay  dividends 
and  to  leave  an  adequate  surplus.  In  the  case  of 
the  Lehigh  Valley,  this  surplus  has  mounted  up  to 
$25,000,000. 

Every  modern  business  man  disposes  of  the  total 
receipts  of  his  business  in  some  such  way  as  that 
indicated.  The  business  man  who  cannot  pay  his 
running  expenses,  fixed  charges  and  dividends, 
and  show  some  surplus,  is  scanned  critically. 
Should  he  fail  to  pay  dividends,  he  is  considered 
unprosperous.  If  he  does  not  meet  the  interest 
on  his  bonds,  he  is  taken  into  court  and  declared 
a  bankrupt.  Running  expenses,  fixed  charges, 
dividends  and  surplus  are  not  merely  fair;  they 
are  essential  to  business  success.  They  are  con- 
sidered a  "right"  by  the  organizers  of  every 
legitimate  business. 

Suppose  the  anthracite  worker,  who  is  striving 
to  support  a  family  on  a  wage  ranging  from  $2.50 
to  $3.50  a  working  day  ($500  to  $900  per  year), 
should  apply  to  the  financing  of  his  family 
affairs  the  financial  formula  adopted  by  any 
well-managed  modem  business.  Since  he  must 
allow  for  riinning  expenses,  fixed  charges, 
dividends  and  surplus,  he  would  proceed  as 
follows : 

First.      He  would  pay,  from  the  total  family 


WAGES  135 

income,  the  family  running  expenses — food,  cloth- 
ing, housing,  medicine  and  the  like. 

Second.  From  the  remainder,  his  gross  income, 
he  would  take  interest  on  the  investment  which 
has  been  made  in  bringing  up  and  educating  his 
wife  and  himself ;  insurance  against  all  reasonable 
contingencies,  such  as  sickness,  accident,  death 
and  unemployment;  and  a  sum  for  depreciation 
sufficient  to  compensate  for  the  inevitable  de- 
crease in  his  earning  power  and  for  the  old  age 
during  which  he  and  his  wife  can  no  longer  earn 
anything. 

Third.  The  remaining  net  income  should  be 
sufficient  to  enable  the  worker  to  pay  himself 
dividends  proportionate  to  the  excessive  risks 
which  he  runs  in  bringing  a  family  into  the  world 
and  attempting  to  rear  it;  and  sufficient  to  add 
at  least  something  to  the  surplus  which  the  family 
lays  aside  to  provide  against  such  imtoward 
events  as  births,  deaths  and  prolonged  sickness. 

The  worlonan  who  conducted  his  affairs  on  this 
basis  would  be  a  sound,  sane,  safe  financier.  He 
would  also  be  a  seven-day  wonder.-  If  the  pre- 
ceding section  established  any  point,  it  was  that 
a  large  percentage  of  wage-earners  receive  a  wage 
which  will  not  pay  even  decent  running  expenses. 
Any  business  man  who  attempted  to  conduct  a 
business  on  a  basis  that  would  pay  only  the 
flimsiest  of  up-keep  charges  would  be  regarded  as 
a  subject  for  mental  treatment,  yet  the  bulk  of 
anthracite  workers  find  themselves  in  exactly  that 
predicament.      They    are    conducting    a    family 


136  ANTHRACITE 

business  on  a  basis  that  will  not  pay  reasonable 
running  expenses.  The  legitimate  fixed  charges  of 
business — interest  on  the  investment,  adequate 
insurance  and  depreciation — are  far  above  the 
reach  of  most  wage-workers  who  have  a  family  of 
six  to  support.  The  ordinary  worker's  family  is 
a  bankrupt  concern — it  cannot  even  meet  the 
interest  on  its  bonds.  And  dividends  ?  The  ordi- 
nary worker  is  thankful  if  he  can  pay  the  bill 
incident  to  up-keep.  Dividends  are  a  luxury  of 
which  he  does  not  dream. 

Place  before  any  level-headed  man  of  affairs 
this  proposition:  "I  have  a  business  which  is 
barely  able  to  pay  running  expenses.  We  can't 
meet  our  fixed  charges,  and  our  wildest  flights  of 
imagination  have  never  carried  us  as  far  as  divi- 
dends and  surplus.  Will  you  join  in  the  venture  ? ' ' 
The  statement  is  grotesque,  yet  it  sets  forth  the 
financial  position  of  a  great  body  of  anthracite 
wage-earners. 

One  further  point  should  be  noted.  After  the 
business  man  has  paid  running  expenses  and  fixed 
charges,  the  remainder  is  income — "net  income." 
The  great  mass  of  wage-earners  who  never  receive 
enough  to  pay  more  than  their  bare  running 
expenses  have  no  "income"  in  the  real  sense  of 
that  word.  They  are  getting  mere  up-keep  or 
subsistence. 

As  a  business  proposition,  for  a  family  of  six, 
the  ordinary  anthracite  wage  is  absurdly  inade- 
quate. No  business  man  would  consider  it.  It 
violates  every  business  standard  which  the  prac- 


WAGES  137 

tice  of  "-.he  modern  man  of  affairs  recognizes  as 
legitimate.  Every  concept  of  modem  business 
management  cries  "shame"  at  the  very  thought 
of  the  business  proposition  which  the  anthracite 
wage-scale  presents  to  tens  of  thousands  of  its 
workers. 

9.  The  Anti-Socid  Nature  of  the  Anthracite  Wage 

The  health  inadequacy  and  the  business  inade- 
quacy of  the  anthracite  wage  can  be  demon- 
strated statistically.  The  proof  of  the  social 
inadequacy  of  wages  rests  upon  more  general 
considerations. 

Society  must  develop  a  system  of  compensa- 
tion which  will  stimulate  industry  and  thrift 
among  the  people  who  do  its  work.  A  wage  sys- 
tem or  any  other  system  of  distributing  the 
products  of  industry  must  be  based  on  an  adequate 
appreciation  of  this  fundamental  principle. 

The  first,  and  probably  the  most  fundamental, 
social  objection  which  may  be  raised  against  the 
present  wage  scale  is  that  it  fails  very  largely  to 
stimulate  the  ambition  of  the  worker.  There  are 
two  reasons  for  this  failure.  On  the  one  hand, 
the  wage  scale  is  so  utterly  rigid  that  the  man 
doing  good  work  is  placed  on  the  same  footing 
with  the  man  doing  poor  work;  the  enthusiastic 
worker  is  placed  on  the  same  basis  with  the 
indifferent  worker.  This  holds  true  of  piece-rate 
payment  as  well  as  of  time-rate  payment.  The 
rule  of  most  producing  establishments  is  "any- 
thing that  will  pass  the  inspector."     Furthermore, 


138  ANTHRACITE  / 

the  individual  may  work  as  hard  as  he  pleases, 
devoting  all  of  his  energy  to  the  work  in  hand; 
despite  this,  he  is  unable  to  raise  his  wage  rate 
and  very  frequently  is  unable  to  increase  his  wages. 
At  the  same  time,  industry  is  organized  on  such 
a  large  scale  basis  that  the  number  of  positions 
"at  the  top"  is  strictly  limited.  Among  the 
employees  of  the  American  railways,  for  example, 
one  in  one  htmdred  is  an  officer.  The  proportion 
is  higher  for  manufacturing  industries,  although 
it  is  seldom  that  more  than  10  per  cent  of  the  men 
employed  in  an  established  industry  hold  positions 
which  involve  even  a  moderate  amount  of  respon- 
sibility and  initiative. 

The  wage  scale  is  fixed  either  by  agreement 
between  the  employer  and  the  union,  or  by  custom 
and  common  consent.  No  one  even  pretends  that 
there  is  a  definite  relation  between  the  values  pro- 
duced by  the  worker  and  the  wage  which  he 
secures. 

The  worker  is  not  paid  in  proportion  to  his 
product.  Wages  are  never  fixed  on  that  basis, 
with  this  single  exception — that  no  employer  can 
afford  to  pay  any  more  in  wages  than  a  group  of 
men  are  producing  in  product.  The  law  of 
monopoly,  "all  that  the  traffic  wiU  bear,"  is  the 
law  which  fixes  the  anthracite  wage.  An  employer 
has  a  Scotchman  working  for  him  at  $3  a  day. 
An  equally  efficient  Lithuanian  offers  to  do  the 
same  work  for  $2.  The  employer  is  not  in  busi- 
ness for  his  health,  and  the  work  is  given  to  the 
lowest  bidder. 


WAGES  139 

An  employer  never  determines  a  wage  by  asking 
the  question:  "How  much  does  this  man  pro- 
duce?" Rather  he  asks,  "What  will  it  cost  me  to 
get  another  equally  efficient  person  in  his  place?" 
It  is  the  cost  of  replacement  and  not  the  values 
created  in  production  which  determines  the  wage 
that  a  man  receives. 

The  phrase,  "He  gets  all  that  he  is  worth," 
means  merely  this — that  the  employer  is  paying 
him  as  much  as  he  has  to  pay  another  equally 
efficient  person  to  do  the  same  thing.  Whether 
he  is  hiring  bricklayers,  bookkeepers  or  coal- 
heavers,  the  wage  that  he  pays  depends  upon 
the  supply  and  demand  of  labor.  This  law 
is  excellently  illustrated  during  a  time  of 
financial  and  industrial  depression,  when  there 
is  a  surplus  of  labor  and  a  dearth  of  oppor- 
tunity for  employment.  Many  industries  at 
once  reduce  their  wages  because  they  are 
able  to  get  all  of  the  people  that  they  want  at  a 
lower  figure. 

The  wage  contract,  as  it  is  called,  knows  no 
social  morality  and  is  based  on  no  standard  of 
social  ethics.  It  is  subject  only  to  the  law  of 
supply  and  demand,  and  to  the  law  of  monopoly 
price.  The  employer  pays  his  labor  as  little  as 
he  can.  The  worker  demands  a.nd  gets  as  much  as 
he  can.  Until  recently  there  has  been  no  general 
idea  that  a  minimum  wage  was  a  social  necessity. 
The  individual  laborer,  bargaining  with  the 
employer,  made  the  best  terms  he  could.  If  labor 
was  scarce,  he  was  successful;   if  it  was  a  drug  on 


140  ANTHRACITE 

the  market,  his  wages  were  reduced  to  a  starva- 
tion level. 

Another  consequence  follows  from  the  ruthless 
bargaining  of  the  competitive  labor  market.  The 
bargain  takes  place  between  the  employer  and  a 
worker,  irrespective  of  social  obligations.  The 
consequences  are  doubly  disastrous  to  the  man 
with  the  family  depending  upon  him.  A  common 
occupation,  quarrying,  for  example,  may  be  car- 
ried on  by  married  or  by  single  men.  The  em- 
ployer does  not  even  put  himself  to  the  trouble  of 
asking  whether  the  prospective  employee  is  mar- 
ried or  single,  because  that  makes  no  difference  if 
a  man  is  handy  with  his  tools.  The  man  with 
a  family  is  brought  into  active  competition  with 
the  man  who  has  no  family  obligations.  The 
native-bom  head  of  a  household  must  accept 
labor  terms  which  are  satisfactory  to  the  foreign- 
bom  single  man.  Industry  does  not  inquire  into 
a  worker's'  social  obligations.  It  simply  asks 
whether  he  is  able  to  do  the  work,  and  at  what 
price.  The  competition  of  the  labor  market  does 
the  rest. 

Society  demands  and  expects  that  men  shall 
support  families.  The  future  of  the  state  hinges 
upon  the  fulfillment  of  this  presupposition.  At 
the  same  time,  the  modem  economic  organization 
makes  no  attempt  to  assist  the  man  who  is  bring- 
ing up  a  family  to  face  the  competition  of  the  man 
who  has  no  family  dependent  upon  him. 

There  is  no  relation  between  the  social  (family) 
needs  of  a  man  and  the  wage  which  he  receives. 


WAGES  141 

Wages   are   fixed   wholly   independent   of   social 
relations. 

The  anthracite  wage  is  anti-social.  The  present 
system  of  wage  payment  fails  to  stimulate  workers 
to  industry  and  thrift  because  it  has  not  given 
them  a  reward  in  proportion  to  their  exertions 
and  abihty.  There  is  no  relation  between  product 
and  wages.  Rather  wages  are  fixed  by  competi- 
tion and  monopoly.  The  present  wage  scale  fails 
completely  to  provide  a  return  in  proportion  to 
social  needs.  The  simplest  requirements  of  social 
progress  call  for  ambition,  for  justice,  and  for  the 
provision  of  health  necessities.  The  present 
anthracite  wage  scale  offends  even  these  primitive 
social  standards. 

10.  The  Anthracite  Wage  and  the  Increased  Cost  of 
Living 

The  wage  of  many  anthracite  workers,  when 
measured  in  terms  of  physical,  economic  or  social 
adequacy,  is  meager.  The  wages  paid  to  a  great 
body  of  the  anthracite  mine  workers  are  not 
sufficient  to  maintain  physical,  economic  and 
social  efficiency.  Another  phase  of  the  matter 
remains  to  be  considered — the  relation  between 
the  increase  in  anthracite  wages  and  the  increase 
in  the  cost  of  Hving. 

Granted  some  will  insist  that  the  wages  of  the 
miners  are  not  entirely  adequate  to  provide  for 
the  demands  of  efficiency,  it  is  still  true  that  the 
miners  have  been  constantly  bettering  their 
position. 


142  ANTHRACITE 

The  past  few  years  have  witnessed  several 
bitter  labor  struggles  in  the  anthracite  region. 
The  workers  have  maintained  a  powerful  trade 
union  at  great  cost.  During  the  labor  disturb- 
ances, the  workers  have  sacrificed,  the  wage  loss 
has  been  enormous,  property  has  been  destroyed, 
and  the  social  and  political  organization  has 
broken  down.     What  is  the  outcome  ? 

Three  periods  must  be  considered.  First,  there 
is  the  period  1890  to  1914;  second,  the  period 
1903  to  1914;  and  third,  the  period  1911  to  1914. 
The  cost  of  living  facts  that  are  available  date  from 
1890.  The  great  labor  struggle  of  1902  marks  an 
epoch  in  the  struggle  of  the  anthracite  worker  for 
better  conditions  of  Hfe;  and  the  readjustment  in 
1912  gives  a  brief  period  of  contrast  with  the 
situation  at  the  present  time. 

The  ordinary  worker's  family  spends  at  least 
two-fifths  of  its  money  for  food,  one-fifth  for  rent; 
one-sixth  for  clothing;  and  the  remainder  for 
miscellaneous  things  like  insurance,  saving,  recre- 
ation, education,  health. 

The  "United  States  Bureau  of  Labor  has  been 
collecting  figures  on  food  costs  since  1890.  Dtir- 
ing  those  years,  in  the  North  Atlantic  States,  the 
cost  of  food  rose  60  per  cent.  From  1903  to  1914 
the  cost  of  food  rose  40  per  cent.  From  1911  to 
1914  the  cost  of  food  rose  17.2  per  cent. 

Rent  costs  are  difficult  to  secure.  No  one  has 
made  any  study  of  rent  costs;  hence  there  are  no 
figtu-es  available.  Isolated  instances  indicate  that 
there  has  been  a  considerable  increase  in  rent 


WAGES  143 

during  the  past  twenty  years.  Just  how  great 
that  increase  has  been  no  one  is  in  a  position  to 
say. 

The  most  complete  clothing  figures  are  pub- 
lished in  the  wholesale  price  bulletins  of  the  United 
States  Bureau  of  Labor.  Between  1890  and  1913 
the  wholesale  prices  of  clothing  rose  about  one- 
fifth.  Between  1903  and  1914  the  prices  rose 
about  one-third. 

If  the  figures  were  available  it  would  be  profit- 
able at  this  point  to  work  out  the  increase  in  the 
total  cost  of  living,  weighted,  or  apportioned 
according  to  the  amount  of  money  spent  for  each 
item.  The  figures,  unfortunately,  are  not  to  be  had. 

There  is  another  very  important  consideration 
that  is  frequently  overlooked  in  discussions  of  the 
cost  of  living.  "Living"  means  doing  the  things 
that  are  done  in  the  group  to  which  one  belongs. 
The  cost  of  living  means  the  cost  of  keeping  up 
with  the  social  standard. 

During  the  past  twenty-five  years  there  has 
been  an  immense  increase  in  the  standard  of  life. 
Many  new  lines  of  expenditures  have  been  intro- 
duced, as,  for  example,  the  cost  of  health,  of  recre- 
ation and  of  education.  Doctors,  dentists,  moving 
pictures,  compulsory  education  laws,  newspapers, 
magazines  and  the  like  have  all  been  added  to  the 
list  of  things  that  the  ordinary  American  considers 
necessary  to  his  welfare.  Twenty-five  years  have 
made  these  numerous  additions  to  the  standard 
of  living.  Those  who  live  in  American  commimi- 
ties  must  keep  up  with  the  times. 


144  ANTHRACITE 

It  is  no  argument  to  say  that  a  great  body  of 
the  anthracite  workers  are  foreigners.  One  of  the 
chief  aims  of  American  social  organization  is  to 
"Americanize"  the  foreigner.  If  that  means  any- 
thing it  means  getting  the  foreigners  to  adopt  the 
American  standard  of  Hving. 

Twenty-five  years  have  witnessed  a  consider- 
able increase  in  the  price  of  the  articles  necessary 
to  maintain  life.  They  have  also  witnessed  a 
rapid  rise  in  the  standard  of  life.  Has  the  increase 
in  anthracite  wages  been  sufficient  to  offset  this 
increased  cost  of  Hving  ? 

Following  the  labor  disturbances  in  the  late 
eighties,  there  was  a  period  of  a  dozen  years  dur- 
ing which  the  workers  bargained  individually  with 
their  employers  and  took  what  they  could  get. 

During  the  period  immediately  preceding  the 
break-up  of  the  union,  the  miners  had  worked  out 
a  rather  high  standard  of  co-operation.  The 
union  paid  sick  and  death  benefits  and  benefits 
to  widows  and  orphans.  There  was  a  miners' 
newspaper,  which  encouraged  unity  of  action. 
There  were  co-operation  stores,  and  through  the 
efforts  of  the  union,  the  first  mine  inspection  law 
was  passed.  Another  law  was  enacted  which 
compelled  the  v/eighing  of  coal.^ 

The  union  was  broken  up  through  the  per- 
sistent efforts  of  the  operators.  "With  the  sur- 
render of  the  men,  they  were  compelled,  as  a 
condition  of  obtaining  work,  to  sign  away  the 
right  of  having  their  coal  weighed.     The  sHding 

t^  »  "Conciliation  and  Arbitration,"  op.  cit.,  p.  214. 


WAGES  145 

scale  continued  in  operation,  but  the  determina- 
tion of  the  basis  and  the  prices  paid  to  labor 
were  entirely  in  the  hands  of  the  operators  till 
the  strike  of  1900. "^  Until  1900,  therefore,  there 
was  no  such  thing  as  a  standard  wage  in  the 
anthracite  fields.  Hence,  no  adequate  descrip- 
tion of  the  wage  conditions  during  these  years 
can  be  given.  Indeed,  it  is  not  until  the  investi- 
gation made  by  the  Anthracite  Strike  Com- 
mission in  1902  that  a  really  adequate  statement 
of  the  wage  problem  is  made. 

State  reports  do  contain  some  material  on  wages 
during  this  period.  These  figures,  gathered  by 
Mr.  Suffem,  are  as  follows  i^ 

Table   XI. — Earning  and  Working  Time   of  Anthracite 
Mines,  1890-1911, 

Earnings  of 
Contract  Miners 
Days  Average 

Year  Worked  Daily  Yearly 


1890 179  $2.39  §427. 81 

1897 233  1.79  417.84 

1902 175  2.83  495.97 

1904 231  2.96  684.78 

1906 207  3.09   "  641.13 

1909 213  3.06  651.28 

1911 233  3.19  743.79 

The  earlier  figures  are  extremely  unsatisfactory. 
The  average  yearly  earnings  are  secured  by  mul- 
tiplying the  average  daily  wage  by  the  number 
of  days  worked.     There  is  no  indication  of  the 

1  "Conciliation  and  Arbitration,"  op.  cit.,  p.  214. 

2  Ibid.,  p.  360-61. 

10 


146  ANTHRACITE 

method  that  was  pursued  in  ascertaining  the 
average  daily  wage.  The  figures,  from  many- 
points  of  view,  are  open  to  grave  question. 

Taking  the  figures  on  their  face,  they  show  that 
the  average  daily  wages  of  contract  miners  in- 
creased 33  per  cent — or  almost  exactly  one-third, 
between  1890  and  1911.  Suffem  gives  no  figure 
for  average  daily  wages  in  1897,  but  dividing  the 
yearly  earnings  by  the  number  of  days  worked, 
a  figure  of  $1.79  is  secured.  If  this  figure  is 
correct,  the  rise  in  average  daily  wages  since  1897 
is  far  greater  than  it  was  since  1890. 

Turniag  now  to  average  yearly  earnings,  the 
increase  has  been  considerably  greater  than  in 
average  daily  wages,  because  of  the  higher  number 
of  days  worked  during  recent  years,  Suffem 
states  the  niimber  of  days  worked  in  1890  as  179. 
The  United  States  Geological  Survey  places  it  at 
200  and  makes  the  average  number  of  days 
worked  in  1890,  1891  and  1892  abotit  200.  Accept- 
ing this  figure,  the  average  annual  earnings  in  1890 
(at  $2.39  per  day)  would  have  been  $478;  and 
the  average  yearly  earnings  in  1911  were  $743.79 
in  a  year  that  reported  233  working  days.  The 
increase  in  average  yearly  earnings  is  therefore 
55  per  cent.  Between  1911  and  1914  wages  were 
increased  (1912)  about  5  per  cent.  In  1914, 
however,  the  number  of  days  worked  was  only 
229.  There  would,  however,  be  some  addition 
to  this  55  per  cent. 

No  further  use  will  be  made  of  these  figures, 
because  they  are  unsatisfactory  in  the  extreme. 


WAGES  147 

It  may  be  noted  that  the  figures  for  the  anthra- 
cite industry  published  by  the  Biu^eau  of  Mines, 
the  United  States  Geological  Survey  and  the 
Secretary  of  Internal  Affairs  of  Pennsylvania  do 
not  always  correspond.  Several  instances  of  this 
have  already  been  noted.  Suffem  is  not  specific 
regarding  the  origin  of  all  of  his  figures,  and 
further  analysis  seems  to  promise  little  result. 
The  figures,  on  their  face,  show  that  between  1890 
and  1911,  the  wage  rates  of  contract  miners 
increased  by  about  33  per  cent,  and  the  annual 
earnings  by  about  55  per  cent. 

The  really  reliable  wage  data  must  be  drawn 
from  a  period  subsequent  to  the  investigations  of 
the  Anthracite  Strike  Commission  of  1902.  The 
first  complete  year  since  the  work  of  this  Com- 
mission is  1903. 

As  a  result  of  an  immense  expenditure  of  time 
and  effort,  the  Commission  of  1902  fixed  a  wage 
scale  which  seemed  to  them  equitable.  Their 
conclusions  are  open  co  question,  but  accepting 
them  at  their  face  value,  and  assuming  that  the 
wage  which  they  established  was  a  fair  wage, 
what  changes  in  wages  and  in  the  cost  of  living 
have  occiuTcd  since  that  time  ? 

The  Commission  established  a  sliding  scale, 
under  which  the  miners'  wage  was  to  be  increased 
with  each  advance,  beyond  a  certain  point,  in  the 
wholesale  price  of  anthracite  coal.  For  1903  this 
sliding  scale  award  set  the  wages  of  the  miners 
at  a  point  4  per  cent  above  the  rate  awarded  by 
the  Commission.     In  1912  the  sliding  scale  was 


148  ANTHRACITE 

abolished  and  a  flat  increase  of  10  per  cent  for 
contract  miners  and  of  IH  per  cent  for  inside  day 
workers  was  substituted.  That  agreement  expires 
in  March,  1916.  Until  that  time  the  increase  in 
wage  rates  for  anthracite  miners  over  the  award 
of  1902  is  practically  10  per  cent.  In  other  words, 
the  anthracite  workers  are  receiving  a  wage  rate 
of  10  per  cent  more  in  1915  than  they  received  in 
1903. 

There  has  been  a  considerable  increase  in  aver- 
age yearly  earnings.  The  average  number  of 
days  worked  in  1903,  1904  and  1905  was  207. 
In  1912,  1913  and  1914  the  average  was  239. 
Here  is  an  increase  of  15  per  cent  in  the  working 
time,  making  a  very  substantial  increase  in  the 
amount  earned  by  the  anthracite  workers. 

The  real  test  of  wages  is  not  the  number  of  dol- 
lars received,  but  the  amount  of  food,  clothing  and 
shelter  they  will  buy.  The  facts  available  before 
1903  are  too  crude  to  permit  of  effective  calcula- 
tions, but  since  1903  there  are  figures  that  wiU 
allow  of  some  elaboration. 

There  are,  first,  the  figures  for  number  of  days 
worked,  and  second,  of  food  prices.  The  real 
wage,  resulting  from  these  two  sets  of  figures,  will 
give  the  purchasing  power  of  anthracite  wages  in 
terms  of  food. 

The  Anthracite  Strike  Commission,  in  that  part 
of  its  report  which  deals  with  the  work  of  con- 
tract miners,  concludes  that  the  annual  earnings 
of  contract  miners,  "based  upon  returns  for  the 
year  1901,  range  between  $550  and  $600.     Per- 


WAGES  149 

haps  it  would  be  safe  to  put  the  average  at  $560." 
(P.  50.) 

In  order  to  illustrate  the  type  of  situation  upon 
which  this  conclusion  was  based,  the  next  two 
paragraphs  of  the  report  contain  two  illustrations, 
from  the  Lehigh  Valley  and  the  Lehigh  and  Wilkes- 
Barre  Coal  Companies,  "whose  work  seems  to 
have  been  conducted  as  regularly  and  systemat- 
ically as  any  in  the  region."     (P.  50.) 

"The  reports  of  these  two  companies  included 
only  such  miners  as  worked  in  their  respective 
collieries  throughout  the  year,  and  whose  names 
appear,  for  some  days  at  least,  on  the  payrolls  of 
each  month  in  the  year."  (P.  50.)  The  Lehigh 
Valley  figures  show  annual  earnings  ranging  from 
$667  to  $465  and  averaging  $568  per  year,  or 
$2.41  per  day.  The  average  number  of  days 
worked  was  236.  The  figures  for  the  Lehigh  and 
Wilkes-Barre  Company  show  annual  earnings 
ranging  from  $686  to  $451.  The  average  annual 
earnings  were  $589  and  the  average  daily  earnings 
$2.47.  The  number  of  days  worked  was  238. 
These  two  sets  of  figures  correspond  very  closely 
and  lead  to  the  conclusion  that  in  1901,  a  year  of 
236  working  days,  yielded  average  annual  earnings 
of  about  $575. 

With  these  figures  in  mind,  the  Commission 
decreed  that  10  per  cent  advance  be  given  to  all 
contract  miners.  In  addition  to  this  10  per  cent, 
the  sliding  scale  provided  for  3  or  4  per  cent 
annually. 

An  attempt  will  be  made,  on  the  basis  of  the 


150  ANTHRACITE 

figures  on  which  the  award  of  1912  was  based,  to 
show  what  changes  occurred  in  the  purchasing 
power  of  the  miners'  wage  from  1913  to  1914. 
The  $575  base,  representing  236  working  days 
in  1901,  must  be  increased,  for  1903,  by  14  per  cent 
increase  in  wages.  At  the  same  time,  for  the 
whole  anthracite  region  the  number  of  days 
worked  in  1903  was  only  206,  or  12.7  per  cent  less 
than  the  basis  adopted  by  the  Commission.  The 
earnings  figure  for  1903  would  therefore  be  $571.25. 
Accepting  this  figure  as  a  base,  and  calling  it  100, 
the  earnings  for  subsequent  years,  weighted  in 
proportion  to  the  number  of  days  worked,  and  to 
the  percentage  added  to  the  wages  by  the  changes 
in  the  sliding  scale,  appear  in  Colum.n  two  of  the 
following  table.  In  the  next  column  are  the  figures 
of  the  United  States  Department  of  Labor,  show- 
ing the  increase  in  food  prices.  The  last  column 
is  the  ratio  between  wages  and  food  prices,  or 
real  wages  in  terms  of  food. 

It  must  be  noted  that  the  price  of  food  has 
increased  faster  than  the  prices  of  the  other 
things  the  worker  buys,  though  how  much  faster 
no  one  can  say  accurately.  Expressed  only  in 
terms  of  food  prices,  the  real  wages  of  the  con- 
tract miners  have  been  decreased  during  recent 
years,  in  spite  of  the  increase  in  the  wage  rate  and 
of  the  number  of  working  days.  No  statements 
can  be  made  about  the  wage  of  the  other  anthra- 
cite workers,  for,  despite  the  fact  that  they  are  in 
a  large  majority,  and  that  their  wages  are  much 
lower  than  the  wages  reported  for  the  contract 


WAGES 


151 


miners,  little  attention  was  paid  to  their  wage 
situation  by  the  Anthracite  Strike  Commission, 
and  the  data  regarding  them  are  meager. 

Table    XII. — Estimates    of    Average    Annual  Earnings, 

Price  Index  and  Real  Wages  of  Anthracite  Miners, 

1903  TO  1914. 

Price 
Estimated    Index, 
Average        North 
Annual      Atlantic  Real 
Earnings     States.  Wage 
of          Weighted  or  Pur- 
Contract     per  Con-  chasing 
Miners     sumption  Power 

1903 100    100  100 

1904 97    102  95 

1905 106    101  105 

1906 95    105  90 

1907 107    109  98 

1908 97    111  87 

1909 100    115  87 

1910 117    119  99 

1911 126    119  106 

1912 118    131  90 

1913 ,. 132    137  96 

1914 '. 117    140  83 


Although  there  are  no  satisfactory  wage  figures 
for  the  great  body  of  the  anthracite  workers,  if 
the  position  of  the  contract  miners  is  any  indica- 
tion of  that  of  the  other  anthracite  workers,  they 
have  failed,  in  spite  of  the  immense  expenditure 
of  time  and  effort  and  money  on  the  organization 
and  upkeep  of  the  union,  to  get  an  increase  in 
wages  equal  to  the  rising  cost  of  food,  and  pre- 
sumably to  the  cost  of  living  at  large. 


152  ANTHRACITE 

11.  A  Fair  Anthracite  Wage 

Each  anthracite  worker  may  justly  ask  for  a 
wage  that  will  buy  a  decent  living  for  him  and  for 
a  family  of  reasonable  size.  This  is  the  minimum 
of  fair  wages. 

In  addition  to  the  minimum  wage,  based  on  the 
cost  of  a  decent  living,  the  contract  miner,  the 
mine  laborer  and  such  other  men  as  are  subject  to 
unusually  great  risk,  should  receive  a  wage  that 
recognizes  the  extra  hazard  of  their  occupations. 
In  the  case  of  the  contract  miners,  it  is  evident 
that  this  extra  compensation  for  risk  should  be 
considerable. 

Beyond  these  considerations,  the  amount  of 
skill  demanded  and  the  disagreeableness  of  the 
work  should  exercise  a  determining  influence  in 
fixing  a  fair  wage. 

Assimiing  that  the  wage  decreed  by  the^Anthra- 
cite  Strike  Commission  was  a  fair  wage,  all  groups 
of  anthracite  workers  are  entitled  to  a  very  consid- 
erable increase  in  wages,  based  on  the  great 
increase  in  the  cost  of  living  since  1903.  In 
deciding  the  extent  of  this  increase,  the  greater 
number  of  days  worked  each  year,  during  the  last 
few  years,  should  be  taken  cognizance  of. 

Should  the  foregoing  statements  regarding  a 
fair  wage  be  accepted  as  substantially  sound,  the 
figures  cited  in  this  chapter,  though  obviously 
incomplete,  make  it  clear  that,  looked  at  from 
any  standpoint,  the  anthracite  workers  are  en- 
titled to  a  material  increase  in  wages. 


CHAPTER  5. 

THE  PROFITS  OF  THE  OPERATORS 

1.  The  Era  of  Small  Profits 

The  anthracite  field  has  always  been  profitable 
in  two  senses:  First,  the  product  has  a  wide 
market  that  has  been  growing  steadily  from 
year  to  year;  second,  in  this,  as  in  any  other 
hidden  resource,  the  owner  may,  and  frequently 
does,  "strike  it  rich."  If  the  question  of  profits 
is  faced  from  either  side,  anthracite  is  a  profit- 
able business. 

During  the  early  years  of  anthracite  produc- 
tion the  market  was  strictly  limited  by  the  limited 
transportation  facilities.  Coal  was  a  heavy  com- 
modity that  could  be  carried  only  by  water. 
Until  the  railroads  entered  the  field  there  could 
be  little  general  sale  for  the  product.  The  coming 
of  the  railroads  with  the  rapidly  widening  market 
which  they  offered  led  to  an  era  of  specula- 
tion in  coal  lands,  and  of  energetic  efforts  on 
the  part  of  the  anthracite  railroads  to  secure 
large  coal  areas.  Under  the  spur  of  these 
speculative  and  monopoly  activities,  coal  prop- 
erties were  bought  at  prices  on  v/hich  profits 
could  not  possibly  be  made.  During  the  periods 
of  feverish  buying  and  leasing  by  railroad  inter- 
ests   of    anthracite    property,    agreements    were 

(153) 


154  ANTHRACITE 

entered  into  that  were  plainly  opposed  to  sound 
business  procedure. 

The  Reading  interests,  which  were  leaders  in 
the  later  efforts  to  establish  a  control  in  the 
anthracite  fields,  went  on  the  rocks  in  the  dev- 
astating industrial  storm  that  struck  the  United 
States  in  1892  and  1893.  The  Reading  had 
bought  in  large,  undeveloped  tracts  of  coal  land; 
it  had  assumed  onerous  business  obligations  in  its 
efforts  to  secure  control  of  other  railroad  interests. 
It  had  overstrained  its  credit  at  a  time  when 
credit  was  being  restricted.  Although  the  Read- 
ing properties  were  of  immense  potential  value, 
they  could  not  be  realized  on  imm.ediately.  The 
financial  crash  came  and  the  fate  of  the  Reading 
interests  was  temporarily  sealed. 

The  period  was  one  of  readjustment.  Busi- 
ness was  still  highly  competitive  and  chaotic. 
Among  business  men  generally  there  was  mani- 
fested little  of  that  feeling  of  group  solidarity 
which  they  have  since  displayed.  The  industrial 
world  was  still  a  big  game,  which  every  man 
played  for  himself. 

The  competitive  fever  had  played  havoc  with 
the  interests  of  the  anthracite  coal  owners. 
Under  its  spur,  agreement  after  agreement  in  the 
anthracite  field  had  been  abandoned  or  dissolved. 
The  producers  had  a  vague  understanding  of 
their  mutual  interests,  but  it  was  instiificient  in 
extent  to  down  the  competitive  impulse. 

The  sweep  of  the  1893  panic  taught  American 
business  men  a  lesson.     Competition,  instead  of 


PROFITS  155 

being  the  life  of  trade,  was  in  reality  the  death  of 
trade,  because  it  was  the  death  of  tradesmen. 
Competition  was  dangerous  in  the  extreme  to  all 
concerned.  The  successful  rival  suffered  with  the 
vanquished. 

The  period  from  1893  to  1898  was  a  dismal 
story  of  industrial  hardship.  Times  were  bad. 
Orders  were  light.  Collections  were  poor.  Credit 
was  shaken.  The  whole  industrial  world  paused 
in  its  onward  rush. 

The  anthracite  business  was  affected  as  severely 
as  most  others.  Prices  dropped  to  impossibly 
low  figures.  Men  worked  their  colHeries  at  a 
loss  in  order  to  keep  their  places  in  the  market. 
The  anthracite  railroads  cut  or  passed  dividends. 
Capitalized  at  high  figures,  struggling  with  en- 
cumbering fixed  charges  in  the  shape  of  bonded 
debt,  lease  obligations  and  the  like,  the  anthra- 
cite operators  passed  through  a  period  when 
profits  were  meager  indeed. 

These  hard  times  in  the  anthracite  coal  field 
were  in  part  due  to  the  country-wide  industrial 
depression  and  in  part  to  the  hit-or-miss  fashion 
in  which  the  anthracite  trade  had  been  conducted. 
The  operators  had  displayed  little  regard  for  one 
another.  They  had  fought  when  they  should 
have  signed  truces.  They  had  engaged  in  price 
wars  at  a  time  when  they  might  have  been 
reaping  monopoly  profits. 

The  lesson  of  the  long  industrial  depression 
that  ended  with  the  boom  year  of  1898  was 
unavoidable.     Co-operation  paid.     "Mutual  help- 


156  ANTHRACITE 

fulness"  was  a  formula  far  superior  to  "every 
man  for  himself."  If  profits  were  desired  in 
the  anthracite  field  or  in  any  other  field,  there 
was  only  one  thing  to  be  done — those  interested 
in  the  anthracite  coal  fields  must  learn  the  ele- 
ments of  team  work. 

The  result  to  the  American  business  world  of 
this  famous  lesson  of  the  nineties  was  an  effec- 
tive spirit  of  combination  that  brought  people 
together.  Since  that  co-operative  spirit  took 
possession  of  the  anthracite  field  the  industry 
has  been  profitable. 

2.  Making  Anthracite  Profitable 

Since  the  formation  of  the  anthracite  com- 
bination in  1898  the  anthracite  industry  has 
paid.  Even  in  hard  years  dividends  have  been 
regular  and  surpluses  have  been  laid  by  with 
unfailing  regularity. 

Table   XIII. — The   Average   Wholesale   Price   of   Stove 
Coal  at  New  York  Harbor,  1890-1904.1 


1890 

First  Period 

13.71 

...      3.85 

Second  Period 
1898      $3.80 

1891. 

1899 

3.70 

1892. 
1893. 

1894. 

4.15 

4.19 

3.60 

1900 

1901 

1902 

1903 

1904 

3.95 
4.32 
4.46 

1895. 

3.13 

4.82 

1896. 

3.79 

4.82 

1897. 

4.01 

1  Bulletin  149,  United  States  Bureau  of  Labor,  p.  135. 


PROFITS  157 

The  men  behind  the  combination  of  1898  saw 
that  the  chief  thing  necessary  for  the  financial 
prosperity  of  the  anthracite  fields  was  a  higher 
price  for  anthracite  products.  Between  1898 
and  1903  this  higher  price  became  a  reality.  The 
movement  in  the  price  of  stove  coal  illustrates 
the  point. 

The  figures  in  the  First  Period  give  an  idea  of 
the  price  movements  up  to  the  formation  of  the 
combination.  The  figures  show  astonishingly 
sudden  changes.  The  price  was  at  $4.19  in  1893 
and  at  $3.13  in  1895.  By  1897  the  price  was  up 
to  $4.01.  When  the  fact  is  borne  in  mind  that 
these  are  wholesale  prices  in  a  staple  product, 
some  idea  can  be  formed  of  the  instability  of  the 
anthracite  business  during  those  hard  years. 

Stove  coal  prices  touched  rock  bottom  in  1895 
($3.13).  The  combination  of  1898  found  prices 
at  the  level  they  had  occupied  in  1890  ($3.71), 
when  the  Reading  interests  were  attempting  to 
control  the  field. 

The  Second  Period  chronicles  the  success  of  the 
anthracite  combination  of  1898.  Under  the  im- 
petus of  this  co-operative  venture,  prices  rose  from 
$3.80  in  1898  to  $4.82  in  1903.  At  that  figure 
they  continued  until  1912,  when  they  went  to  $5.06. 

The  jump  in  the  price  of  anthracite  was  sud- 
den, and  was  not  in  any  sense  parallel  to  the 
general  rise  in  the  cost  of  living  that  was  taking 
place  at  the  same  time.  The  United  States  Bureau 
of  Labor  (Bulletin  No.  140,  page  11)  reports  an 
increase  in  food  prices  between  1898  and  1903  of 


158  ANTHRACITE 

15  per  cent.  During  the  same  period  anthracite 
prices  rose  27  per  cent.  From  1903  to  1912, 
while  food  prices  increased  34  per  cent,  the  price 
of  anthracite  remained  stationary. 

The  rapid  jump  in  hard  coal  prices  between 
1898  and  1903,  and  the  stability  of  prices  after 
that  date,  is  evidence  of  the  existence  of  a  com- 
bination to  control  price  movements.  Professor 
Jones  (pp.  160-61)  cHnches  the  point  by  point- 
ing out  the  manner  in  which  the  price  increases 
were  brought  about. 

"The  advance  in  1902  was  made  in  October, 
the  various  companies  putting  out  a  uniform 
schedule  of  monthly  prices  for  the  prepared  sizes 
of  coal,  averaging  about  50  cents  higher  than  the 
previous  prices.  The  schedule  for  stove,  egg,  and 
chestnut  was  $5  per  ton  at  the  terminal  points 
nearest  the  city  of  New  York,  and  5  cents  less 
at  the  terminal  points  farther  away.  These 
uniform  advances  in  the  price  of  coal  were  put 
out  at  the  same  time,  after  consultations  among 
the  presidents  of  the  railroads  or  their  coal  com- 
panies, each  of  whom  was  aware  of  the  price 
which  the  other  companies  were  to  charge. 
President  Truesdale  of  the  Lackawanna  testified 
in  1908  that  the  advance  in  the  circular  price 
of  the  Lackawanna  in  1902  was  made  by  the 
officers  of  the  coal  sales  department  of  the  rail- 
road after  consultation  with  him. 

"President  Thomas,  when  asked  with  whom  he 
consulted  in  the  fixing  of  the  price  in  1902,  re- 
plied, 'I  do  not  recollect  now.     I  think  probably 


PROFITS  159 

I  consulted  with  Mr.  Baer;  very  likely  I  asked 
Mr.  Truesdale  what  he  was  going  to  do.  I  know 
I  asked  Mr.  Walter  what  he  was  going  to  charge 
for  coal.'  It  is  significant  that  this  considerable 
advance  in  the  price  of  the  prepared  sizes  of 
anthracite,  made  by  the  presidents  after  con- 
sultation, remained  in  force  until  1912,  with  the 
exception  of  the  omission  of  the  April  discount  in 
1906  on  account  of  the  suspension  of  mining 
operations  in  April  of  that  year." 

The  anthracite  combination,  through  concerted 
action,  increased  the  price  of  coal  between  1898 
and  1903  by  an  amount  sufficient  to  yield  hand- 
some returns  in  the  form  of  earnings,  dividends 
and  surpluses.  This  statement  may  be  sub- 
stantiated in  a  number  of  ways. 

Take  first  a  single  illustration.  "The  report 
of  the  Lackawanna  Railroad  for  1903  showed 
a  net  profit  on  the  sale  of  coal  of  over  $3,000,000. 
This  was  85  per  cent  greater  than  its  profit  in 
1901.  When  asked  before  the  Interstate  Com- 
merce Commission  whether  he  attributed  'that 
gain  of  85  per  cent  in  profit  very  largely  to  the 
excess  of  the  new  price  over  the  increased  cost 
of  mining,'  President  Truesdale  answered,  'That 
had  considerable  to  do  with  it,  of  course.'  "^ 

Another  measure  of  the  effect  of  the  price 
increase  may  be  seen  in  the  increase  of  dividends 
declared  by  the  anthracite  carriers. 

The  production  of  coal  was  increasing.  In 
the  years  from  1895  to  1899  the  total  produc- 

i"The  Anthracite  Coal  Combination,"  op.  cil.,  p.  158. 


160  ANTHRACITE 

tion  of  anthracite  varied  from  41,637,864  tons 
(1897)  to  47,665,204  (1899).  (Mineral  Resources, 
1913,  Part  II,  p.  889.)  In  1897  the  mines  worked 
only  150  days;  in  1899,  173  days.  (Mineral 
Resources,  1913,  Part  II,  p.  753.)  Between  1900 
and  1904  the  production  moved  up  from  45,000,000 
to  57,000,000  tons;  the  days  of  operation  from 
166  to  200.  Note  how  this  increase  of  27  per  cent 
in  production  compares  with  the  increase  in 
dividends. 

The  year  1898  shows  dividends  as  follows: 

Central  Railroad  of  New  Jersey 4  per  cent 

Lackawanna 7     "      " 

Delaware  and  Hudson 5     "      " 

Pennsylvania  Railroad 5     "      " 

Lehigh  Coal  and  Navigation  Company .. .  4    "      " 

By  1903  a  transformation  had  occurred.  The 
dividend  of  the  Jersey  Central  rose  from  4  to  8 
per  cent;  the  Delaware  and  Hudson,  from  5  to 
6  per  cent;  the  Pennsylvania,  from  5  to  6  per 
cent;  and  the  Lehigh  Coal  and  Navigation,  from 
4  to  6  per  cent.  The  next  year,  1904,  shows  a 
slight  increase  in  dividends,  and  in  1905  the 
dividends  declared  were  as  follows : 

Reading  Company 3|  per  cent 

Central  Railroad  of  New  Jersey 8  " 

Lehigh  Valley 4  " 

Lackawanna 20 

Delaware  and  Hudson 7  " 

Pennsylvania 6 

Ontario 41 

Lehigh  Coal  and  Navigation  Company. . .     8  " 

Philadelphia  and  Reading 20  " 


PROFITS  161 

In  1898  the  Reading  Company,  the  Lehigh  Valley, 
and  the  Ontario  had  declared  no  dividends.  The 
dividend  situation  in  1905  was  eminently 
satisfactory. 

The  price  schedules  adopted  in  1903  proved 
profitable,  from  the  standpoint  of  dividends,  up 
to  1912,  when  the  next  price  increase  occurred. 
Thus  in  1911  the  dividend  rates  were: 

Reading  Company 6  per  cent 

Central  Railroad  of  New  Jersey 12 

Lehigh  Valley 10 

Lackawanna 55^ 

Delaware  and  Hudson 9 

Pennsylvania 6 

Ontario 2 

Lehigh  Coal  and  Navigation  Company 8 

Philadelphia  and  Reading 15 

The  story  told  by  the  dividend  rates  is  clear 
and  emphatic.  The  price  schedules  which  the 
combination  of  1898  was  able  to  establish  in 
1903  proved  highly  remunerative  over  a  series  of 
years,  some  of  which  were  prosperous  and  others 
unprosperous.  During  good  and  bad  years  alike 
the  dividend  payments  of  the  anthracite  roads 
have  been  eminently  satisfactory  from  the  stand- 
point of  the  investor. 

3.  Anthracite  Profits  and  Railroad  Profits 

The  difficulty  of  analyzing  anthracite  profits  is 
enhanced  by  the  baffling  relation  which  exists 
between   the  costs  of  producing   and  of   trans-* 

,    1  Thirty-five  per  cent  in  extra  dividends. 
11 


162  ANTHRACITE 

porting  anthracite.  Where  the  mining  and  the 
carrying  of  coal  are  under  the  same  management, 
the  carriers  have  for  years  followed  the  policy  of 
operating  the  mines  at  a  slight  profit,  or  even  at  a 
loss,  while  the  chief  profits  went  to  the  railroads. 

There  is  little  question  regarding  the  extent  of 
the  railroad  control  in  the  coal  fields.^  Professor 
Jones  begins  his  chapter  on  "The  Transportation 
of  Coal"  with  this  statement:  "The  railroad  coal 
companies,  including  the  coal  departments  of  the 
railroads  mining  coal  directly,  control  over  90 
per  cent  of  the  total  output  of  anthracite  coal. 
These  companies,  in  turn,  are  controlled  by  the 
eight  important  anthracite  carriers." 

When  the  coal  companies  controlled  by  the 
railroads  pay  freight,  they  really  pay  it  to  them- 
selves. It  is  therefore  a  matter  of  little  conse- 
quence what  the  amount  of  that  freight  rate  is. 
A  profit  is  to  be  recorded  somewhere,  and  no 
one  cares  particularly  whether  it  is  recorded  on 
the  books  of  the  coal  company  or  the  railroad 
company.  When  an  independent  coal  operator 
pays  freight,  he  pays  it  to  a  raihoad  in  which 
he  has  no  concern.  Under  the  circumstances, 
the  manipulation  of  freight  rates  has  been  one 
of  the  favorite  means  of  controlling  the  inde- 
pendent operators.  The  railroads,  in  reaching 
out  for  an  increased  control  over  the  coal  fields, 
have  adopted  this  as  one  of  the  most  workable 
methods  for  discriminating  in  favor  of  the  com- 
panies representing  their  own  interests. 

1  "Arbitration  in  the  Coal  Industry,"  ot>.  cit.,  p.  228-29. 


PROFITS  163 

The  relation  existing  between  coal  mine  profits 
and  railroad  profits  is  thus  explained  by  Dr. 
Jones:  "A  high  freight  rate  reduces  the  profit 
in  marketing  coal  independently,  and  in  the  past 
has  offered  a  strong  inducement  to  the  inde- 
pendent operator  to  sell  his  coal  under  contract 
to  the  raihoad  or  its  coal  company  (and  this  is, 
no  doubt,  the  raison-d'eire  of  the  high  freight 
rate).  J  But  even  including  the  coal  formerly  sold 
under  a  perpetual  contract,  but  now  released  by 
the  order  of  the  Supreme  Court  declaring  these 
contracts  illegal,  only  about  20  per  cent  of  the 
output  is  affected  by  the  freight  rate,  and  this 
percentage  is  certain  to  become  less  and  less, 
regardless  of  whether  the  freight  rate  be  high 
or  low.  The  freight  rate,  however,  will  become 
of  importance,  should  the  present  attempts  on 
the  part  of  the  government  to  divorce  the  busi- 
ness of  transportation  and  mining  meet  with 
success.  Inasmuch  as  'very  few  of  the  railroad 
coal  companies  now  return  a  surplus  of  earnings 
above  expenditures,  even  with  the  present  high 
price  of  coal,  were  these  coal  companies  to  become 
independent  of  the  railroads,  most  of  them,  unless 
they  could  advance  the  price  of  coal  still  higher, 
would  be  compelled  at  the  present  anthracite 
freight  rates  to  go  out  of  business."     (P.  145.) 

The  result  of  this  policy  has  been  the  establish- 
ment of  freight  rates  on  coal  that  are  generally 
considered  to  be  abnormally  high.  The  inde- 
pendent operators  have  made  repeated  attacks 
on  these  freight  rates,  alleging  they  are  one  of 


154  ANTHRACITE 

the  chief  forms  of  abuse  practiced  by  the  dom- 
inant interests  in  the  anthracite  region. 

The  freight  rates  on  anthracite  to  tidewater 
ports  are  quite  uniform.  Thus  the  Erie,  New 
York,  Susquehanna  and  Western,  Ontario,  and 
Central  of  New  Jersey,  charge  $1.60  per  ton  for 
prepared  sizes  from  all  mines  to  tidewater  in  the 
vicinity  of  New  York.  The  Lackawanna  rate  is 
$1.58,  Reading  $1.55,  Lehigh  $1.55,  and  Penn- 
sylvania $1.40.  A  similar  uniformity  prevails 
in  the  case  of  pea  and  buckwheat  sizes.  ^ 

The  Interstate  Commerce  Commission  has 
prepared  an  elaborate  report  on  the  cost  of  carry- 
ing this  coal  on  the  Central  Railroad  of  New 
Jersey.  "It  was  found  that  the  total  operating 
cost  (including  the  cost  of  returning  the  empty 
cars  to  the  mines)  was  59.26734  cents  per  ton 
from  the  Wyoming  region  to  tidewater;  44.35119 
cents  from  the  Lehigh  region;  and  49.03914 
cents  from  the  Upper  Lehigh  region. "^  The 
freight  charges  on  this  coal  to  Port  Elizabeth 
and  Port  Johnson  are:  Prepared  sizes,  $1.55; 
pea  coal,  $1.40;  and  buckwheat  No.  1,  $1.20. 
"If  we  give  to  the  freight  rate  in  each  of  these 
groups  the  weight  to  which  each  is  entitled  by 
virtue  of  the  actual  shipments,  we  arrive  at  an 
average  freight  rate  for  the  Central  of  New  Jer- 
sey of  $1.40  per  ton.  The  cost  of  carrying  such 
coal  to  tidewater  from  the  Wyoming  region  is 
less  than  60  cents;  from  the  Upper  Lehigh  region, 

1  "The  Anthracite  Coal  Combination,"  op.  cit.,  p.  134. 
s  Ibid.,  p.  135-36. 


PROFITS  165 

less  than  50  cents;  and  from  the  Lehigh  region, 
less  than  45  cents.  On  shipments  from  this 
last  region,  therefore,  the  freight  rate  exceeds  by 
more  than  three  times  the  actual  operating  cost. 
This  cost,  it  should  be  clearly  borne  in  mind,  is 
merely  operating  cost.  It  does  not  include  any 
return  on  the  investment."^ 

Similar  figures  were  secured  in  Pennsylvania 
for  the  Public  Service  Commission  by  Price, 
Waterhouse  &  Co.  These  figures  show  the  cost 
of  "transporting  anthracite  coal  from  the  respec- 
tive mining  sections  in  the  eastern  part  of  Penn- 
sylvania to  Philadelphia."  The  report  was  sub- 
mitted January  1,  1914.  The  Price- Waterhouse 
report  shows  that  for  the  year  ending  May  31, 
1913,  the  cost  of  transporting  anthracite  on  the 
Reading  Railway  was:  from  the  Schuylkill  field, 
44.698  cents;  the  costs  on  the  Pennsylvania 
were  61.043  cents  by  one  route  and  54.378 
by  another.  These  costs  are  operating  costs, 
and  make  no  allo\7ance  for  the  payment  of 
fixed  charges. 

The  margin  between  the  cost  of  carrying  the 
coal  and  the  freight  rate  charged  for  the  trans- 
portation is  considerable.  The  average  freight  rate 
on  the  Philadelphia  and  Reading  from  the  mines 
to  Philadelphia  is  $1.55.2  Since  the  operating 
cost  of  carrying  anthracite  coal  from  the  Schuyl- 
kill region  to  Philadelphia  is  less  than  45  cents, 
the  freight  rate  in  this  instance  is  more  than  three 

1  "The  Anthracite  Coal  Combination,"  op.  cil.,  p.  136, 
^  Ibid.,  p.  138. 


166  ANTHRACITE 

times  as  great  as  the  operating  cost  of  trans- 
portation.^ 

Professor  Jones  illustrates  the  profitableness  of 
carrying  anthracite  coal  on  such  a  relation  between 
operating  cut  and  freight  rate  by  citing  the  case 
of  the  Lehigh  Valley.  While  it  derives  a  large 
part  of  its  total  traffic  from  anthracite  coal,  its 
rates  are  among  the  lowest  charged.  During 
"the  fiscal  year  1913  the  Lehigh  carried  14,732,949 
gross  tons  of  anthracite.  Its  gross  earnings  from 
the  transportation  of  this  coal  were  $18,556,161, 
which^was  over  50  per  cent  of  its  gross  freight 
receipts,  and  43  per  cent  of  its  total  operating 
revenue.  Its  gross  earnings  per  net  ton  per 
mile  from  the  carriage  of  anthracite  coal  were 
7.11  mills,  and  from  all  other  freight  5.67  mills, 
or  25  per  cent  greater  for  anthracite.  Were  we 
to  assume  that  the  ratio  of  operating  expenses  to 
gross  earnings  was  the  same  on  anthracite  as 
on  all  its  traffic  (67.62  per  cent),  the  operating 
expenses  chargeable  against  the  transportation 
of  anthracite  would  be  $12,547,676  and  the  net 
earnings  $6,008,485,  or  nearly  41  cents  for  each 
ton  of  anthracite  hauled.  But  as  it  costs  less  per 
ton  to  move  anthracite  coal  than  general  freight, 
the  net  earnings  are  even  greater  than  this  figure. "^ 

Often  it  is  hard  to  distinguish  between  the 
production  costs  and  the  transportation  costs  on 
anthracite.     The  facts  suggest  strongly,  however, 


'  The  Price- Waterhouse  Report  is  in  the  form  of  a  63-page  pamphlet  con- 
taining the  full  statement  of  the  method  used  in  the  making  of  calculations. 
2  "The  Anthracite  Coal  Combination,"  op.  cil.,  pp.    138-39. 


PROFITS  167 

that  freight  rates  on  anthracite  are  fixed,  not  uHith 
relation  to  the  cost  of  transportation,  but  on  the 
basis  of  "all  that  the  traffic  will  bear."  The 
control  of  both  production  and  transportation 
facilities  enables  the  owner  of  the  properties  to 
make  splendid  returns  on  the  investment. 

4.  Anthracite  Prosperity 

During  the  past  decade  the  anthracite  roads 
have  enjoyed  a  surprising  degree  of  prosperity, 
which  has  been  as  persistent  as  it  has  been  gen- 
erous. There  are  several  ways  in  which  this 
prosperity  may  be  measured.  First,  there  are  the 
earnings  of  the  railroads;  second,  the  dividends; 
third,  the  surpluses;  and  fourth,  the  stock  ratings. 
All  four  measures  give  a  very  definite  idea  of 
prosperity. 

For  the  year  1913  the  earnings  on  the  common 
stock  of  the  principal  anthracite  carriers,  after 
the  payment  of  all  expenses,  including  fixed 
charges  and  preferred  dividends,  were:^ 

Reading  Company 17.57  per  cent 

Central  of  New  Jersey 26 .  73 

Lehigh  Valley 16.90 

Lackawanna 32 .  04 

Delaware  and  Hudson 12.95 

Pennsylvania 8.86 

Erie 3.67 

Ontario 2 .  08 

Lehigh  Coal  and  Navigation  Company .  8 .  93 

The  last  normal  year  of  railroad  operations  is 
1913.      The    business    conditions    in    that    year 

1  "The  Anthracite  Coal  Combination,"  op.  cit.,  p._140. 


168  ANTHRACITE 

were  below,  rather  than  above,  those  of  the 
ordinary  year.  The  war  conditions  prevailing 
during  1914  make  the  figtires  for  that  year  dis- 
tinctly non-representative. 

Some  comment  has  already  been  made  on  the 
dividends  declared  by  the  anthracite  carriers. 
There  seems  to  be  some  relation  between  the 
proportion  of  anthracite  business  to  total  business 
and  the  prosperity  of  the  railroad.  The  Central 
of  New  Jersey,  drawing  nearly  half  of  its  freight 
revenues  from  anthracite,  has  been  paying  from 
8  to  12  per  cent  for  a  dozen  years;  the  Lehigh 
Valley,  the  Lackawanna,  and  the  Delaware  and 
Hudson,  with  almost  exactly  half  of  their  freight 
revenues  derived  from  anthracite,  have  been 
able  to  pay  regular  dividends  of  from  4  to  20 
per  cent.  At  the  present  time,  the  Lehigh  Valley 
is  on  a  10-per-cent  basis,  the  Lackawanna  on  a 
20-per-cent  basis,  and  the  Delaware  and  Hudson 
on  a  9-per-cent  basis.  The  Ontario  and  the 
Erie,  with  respectively  two-thirds  and  one-third 
of  their  freight  revenues  derived  from  anthracite 
traffic,  are  not  in  the  dividend-paying  class. 
The  continued  payment  of  these  large  dividends, 
year  in  and  year  out,  is  an  excellent  index  of 
prosperity. 

Another  prosperity  measure  is  the  surpluses 
which  the  railroads  are  able  to  lay  by.  Thus 
the  Lehigh  Valley  had  no  surplus  in  1902.  "By 
1909  it  had  a  surplus  of  $19,200,000,  in  1910  this 
surplus  had  risen  to  $27,000,000,  and  by  1911  to 
over  $30,000,000.      In   1912,  largely  because  of 


PROFITS  169 

the  payment  of  the  extra  dividend  of  10  per 
cent,  the  surplus  declined  to  $23,400,000,  but  in- 
creased in  1913  to  $25,000,000.  The  operations 
of  the  Lehigh  Valley  since  1904  have  thus  been 
highly  profitable."^ 

The  prosperity  of  business  enterprises  is  re- 
flected, with  a  degree  of  fidelity,  in  the  ratings 
which  their  securities  enjoy  in  the  stock  market. 
Since  the  organization  of  the  combination  in 
1898  there  has  been  a  strong  upward  movement 
in  the  stocks  of  the  anthracite  carriers. 

Professor  Jones  has  worked  out  a  careful  state- 
ment of  the  stock  values  of  the  anthracite  roads 
since  the  formation  of  the  combination  of  1898. 
He  bases  his  figures  on  "the  average  of  the  high- 
est and  the  average  of  the  lowest  market  quota- 
tions of  the  common  stock  of  the  eight  important 
anthracite  roads."  He  writes:  "In  1898,  the 
year  when  the  beginnings  in  the  development  of 
the  combination  were  made,  the  average  of  the 
highest  prices  at  which  the  stocks  of  these  roads 
sold  was  $76,  and  the  average  of  the  lowest  was 
$63.  From  1898  until  1909  there  was  an  almost 
steady  advance  in  the  prices  at  which  these 
securities  were  quoted.  In  1909  the  average  of 
the  highest  quotations  was  $231  and  the  average 
of  the  lowest  was  $167.  The  high  average  in 
1909  was  partly  in  sympathy  with  the  general 
high  level  of  stocks  in  that  year  and  partly  in 
anticipation  of  the  payment  of  an  85  per  cent 
dividend    by    the   Lackawanna   Railroad.      The 

i"The  Anthracite  Coal  Combination,"  op.  cU.,  p.  139. 


170  ANTHRACITE 

declaration  of  stock  dividends  by  the  Lacka- 
wanna and  the  Lehigh  Coal  and  Navigation  Com- 
pany in  1909  explains  a  part  of  the  dechne  in 
1910  of  the  average  of  the  highest  market  quota- 
tions, and  likewise  the  drop  in  1911  is  partly 
explained  by  the  privilege  given  in  1910  to  stock- 
holders of  the  Lehigh  Valley  to  subscribe  at  par 
to    $20,000,000   of   new    stock   worth    $125    per 

share  at  its  lowest  quotation 

On  the  whole,  therefore,  it  is  clear  that  the  forma- 
tion of  a  combination,  the  maintenance  of  the 
freight  rates  at  their  high  figure  and  the  frequent 
advances  in  the  price  of  coal  have  made  the 
anthracite  business  a  particularly  profitable  one."^ 
Measured  in  any  terms,  anthracite  profits  have 
been  most  generous  since  the  formation  of  the 
combination  of  1898.  Earnings,  dividends,  sur- 
pluses and  stock  ratings  all  reflect  the  prosperity 
of  the  railroad  interests  that  control  the  anthra- 
cite industry.  During  the  past  fifteen  years, 
whether  times  were  prosperous  or  unprosperous, 
the  anthracite  carriers  have  been  earning  most 
substantial  returns  on  the  anthracite  business. 

5.  Are  Anthracite  Profits  Too  High? 

The  $7  paid  by  the  consumer  for  a  ton  of  coal 
goes  to  the  miner,  the  producer,  the  carrier,  and 
the  retailer.  The  miner  gets  about  $1.80;  the 
railroad  company  a  like  amount;  there  is  the 
cost  of  up-keep  and  of  selling  the  coal,  before 
it  comes  to  the  retailer.      Can  the  profits  made 

I  "The  Anthracite  Coal  Combination,"  op.  cit.,  p.  141. 


PROFITS  171 

by  the  anthracite  interests  on  the  mining  of  coal, 
the  selHng  of  coal  and  the  transportation  of  coal 
be  regarded  as  excessive? 

Judged  in  terms  of  results,  the  question  cannot 
be  handled  in  the  same  way  for  all  of  the  roads. 
To  the  Erie,  for  example,  the  anthracite  combina- 
tion has  not  brought  prosperity.  On  the  other 
hand,  the  Lackawanna  is  a  remarkable  example 
of  the  effectiveness  of  a  conservative  financial 
policy,  a  far-seeing  and  intelligent  business  policy 
and  a  well-controlled  natural  resource  monopoly. 
Lackawanna  profits  are  things  to  conjure  with  in 
the  financial  world. 

There  is  a  wide  difference  between  the  profits 
made  by  individual  roads.  At  the  same  time, 
the  profits  of  the  anthracite  railroads  as  a  group, 
since  the  effective  combination  of  1898,  have 
been  tmiformly  high.  The  common  stock  divi- 
dend paid  by  ten  anthracite  carriers  in  1914 
averaged  9.1  per  cent. 

The  representatives  of  the  Reading,  the  Lehigh 
Valley,  the  Lackawanna  and  the  other  patently 
prosperous  anthracite  roads  are  quick  to  insist 
that  the  profits  are  not  excessive.  The  reply 
reaches  back  into  the  old  problem  of  monopoly, 
and  raises  the  question:  "Upon  what  basis  shall 
the  reasonableness  of  profits  be  determined?" 

Take  first  the  most  flagrant  case — that  of  over- 
capitalization. One  company,  like  the  Reading 
in  the  early  nineties,  starts  a  campaign  to  secure 
control  of  the  major  portion  of  the  anthracite 
field.     In  order  to  achieve  this  result,  it  resorts 


172  ANTHRACITE 

to  a  number  of  practices.  First,  it  guarantees 
a  company  which  it  wishes  to  absorb,  7  per  cent 
dividends  on  its  capital  stock.  This  7  per  cent 
thereupon  ceases  to  be  profits  and  becomes  a 
fixed  charge. 

The  distinction  between  7  per  cent  as  profits 
and  7  per  cent  as  guaranteed  dividends  is  im- 
portant. A  company  in  the  course  of  its  opera- 
tions is  able  to  earn  and  pay  7  per  cent  on  its 
stock  each  year  for  eight  years.  A  lean  year 
ensues.  The  dividend  is  cut  to  5  per  cent  and 
kept  at  that  figure  until  times  become  more  pros- 
perous. Under  such  circumstances  the  dividend 
payment  rises  and  falls  with  the  prosperity  of 
the  business. 

Suppose,  on  the  other  hand,  that  a  7-per-cent 
dividend  is  guaranteed  by  a  leasing  company. 
Through  good  and  bad  years  aHke  the  dividend 
must  be  paid.  To  meet  this  obligation  a  large 
surplus  is  carried  over  from  good  years.  The 
7  per  cent  guaranteed  is  a  fixed  charge  of  the 
same  nature  as  an  interest  charge.  The  moment 
its  payment  ceases  the  company  faces  legal 
proceedings. 

A  guaranteed  dividend  may  be  reasonable  at 
one  time  and  imreasonable  at  another.  The 
right  of  the  railroad  to  earn  6,  7  or  8  per  cent 
in  1910  and  1912  was  scarcely  questioned;  but 
when  the  hard  times  of  1913  and  1914  came  on, 
the  same  earnings  were  looked  upon  as  unreason- 
able. The  whole  coimtry  was  in  the  grip  of  a 
business    depression.       Everyone    was    suffering 


PROFITS  173 

more  or  less,  and  the  demand  of  the  railroads 
that  they  be  allowed  to  increase  rates  and  fares 
at  the  same  time  that  they  were  paying  their 
usual  dividends  seemed  anything  but  fair  to  a 
greater  portion  of  the  population. 

The  promoter  of  an  anthracite  combination 
might  very  conceivably  guarantee  a  dividend  of 
7  per  cent  on  a  property  that  could  earn  but 
5  per  cent.  Such  a  profit  would  undoubtedly  be 
excessive. 

Overpayment  may  take  another  form.  An 
anthracite  producer  decides  to  sell  out.  His 
property  is  bid  for  by  a  number  of  industrial 
leaders.  The  man  who  sells  the  property  knows 
that,  at  present  coal  prices,  it  is  worth  only 
$3,000,000.  The  buyer  expects  prices  to  rise  in 
the  near  future,  and  gambling  on  this  possibility, 
he  pays  $5,000,000  for  the  property.  Previous 
to  the  sale,  the  property  was  earning  $180,000  a 
year  (6  per  cent) .  The  same  amount  equals  less 
than  4  per  cent  on  a  $5,000,000  capitalization. 
What  may  the  new  owner  say  to  the  consumer? 

Suppose  he  should  make  this  statement:  "I 
bought  this  property  for  $5,000,000  and  paid  cash 
for  it.  It  is  an  investment  of  my  "entire  wealth. 
Six  per  cent  is  not  an  unreasonable  return  on  an 
investment.  I  believe  that  I  have  a  right  to  6 
per  cent,  and  I  propose  to  raise  prices  luitil  the 
property  is  earning  $300,000  instead  of  $180,000 
a  year." 

Such  a  statement  would  be  out  of  the  question 
in  a  competitive  industry.      Under  competition 


174  ANTHRACITE 

the  lowest  bidder  sets  the  price,  and  if  a  man  is 
so  foolish  as  to  pay  for  a  business  more  than  it 
is  worth,  he  suffers  the  consequences.  In  the 
anthracite  industry,  however,  the  element  of 
monopoly  enters.  Shall  a  plea  which  would  be 
absurd  under  a  system  of  competition  be  admitted 
under  a  system  of  monopoly? 

There  is,  of  course,  no  end  to  the  possibilities 
of  the  case.  If  it  is  possible  to  pay  $5,000,000 
for  the  property  and  raise  prices  luitil  they  yield 
a  $300,000  profit,  why  not  pay  $10,000,000  for 
the  property  and  raise  prices  until  they  yield 
$600,000?  The  matter  is  thus  easily  reduced  to 
the  absurd. 

The  argument  cannot  be  carried  to  its  logical 
conclusion  without  appearing  ridiculous.  Where, 
then,  is  the  stopping  place?  Obviously,  there  is 
none.  So  long  as  anthracite  land  may  change 
hands  at  increased  prices,  so  long  will  promoters 
and  speculators  anticipate  price  increases  by 
offering  more  for  the  land  at  each  successive  trans- 
action. The  new  buyer,  having  paid  a  larger 
price,  will  come  before  the  people  with  the  old 
plea:  "I  put  my  good  money  into  this  venture. 
Haven't  I  a  right  to  6  per  cent  on  my  invest- 
ment?" Unlike  the  consumer,  he  is  not  forced 
to  think  seriously  about  the  high  price  of  coal. 

The  customary  business  transactions  in  a 
monopolized  natural  resource  will  lead,  inevitably, 
to  increased  financial  obligations  that  must  result 
finally  in  higher  prices.  Even  in  the  absence  of 
speculation  and  rash,  imintelligent  buying,  this 


PROFITS  175 

will  be  true.  How  much  more  will  it  be  the 
case  when  the  monopoly  power  which  the  resource 
possesses  is  eagerly  sought  after  by  groups  of 
men  aiming  to  secure  wealth  and  business  control  ? 

There  is  another  issue  which  must  be  con- 
sidered as  an  essential  part  of  the  problem  of 
determining  the  sufficiency  of  profits.  This 
second  issue  is  raised  by  the  increase  of  land 
values. 

A  mine  expert  discovers  coal.  His  employers 
buy  the  land  at  $100  an  acre  and  sell  it  at  $200 
to  a  mining  company.  This  mining  company 
does  not  begin  operations  at  once.  A  dozen 
years  pass  before  the  first  coal  is  taken  from  the 
ground.  Meanwhile,  the  demand  for  coal  has 
increased.  The  supply  has  diminished  and  the 
land  is  now  worth  $600  an  acre  instead  of  $200. 
The  question  is  raised  as  to  a  reasonable  profit 
on  the  coal.  Twenty  dollars  a  year  is  a  10-per- 
cent retiun  on  the  purchase  price.  It  is  only 
3  per  cent  on  the  present  value.  Sixty  dollars  is 
only  10  per  cent  on  the  present  value,  but  it  is 
30  per  cent  on  the  original  price. 

Shall  an  increase  in  land  values  be  regarded 
as  an  equitable  basis  for  profits?  Land  value 
increase  is  due  to  the  activity  of  the  community. 
No  one  person  is  responsible  for  increased  land 
values.  The  presence  of  population,  the  growth 
of  commerce  and  industry,  new  discoveries  and 
all  of  the  forces  that  constitute  a  growing  civiliza- 
tion make  for  increased  land  values.  The  indi- 
vidual made  an  investment  of  $200  in  coal  land. 


176  ANTHRACITE 

The  community  has  trebled  the  value  of  the  land 
by  its  activities. 

The  situation  is  grave.  Transfers  of  property 
and  speculation,  on  the  one  hand,  and  rising 
land  values,  on  the  other,  provide  the  pretext  for 
a  constant  increase  in  prices.  For  the  consiimer, 
relief  is  in  sight  along  neither  of  these  lines. 

So  long  as  increased  land  values  may  be  capital- 
ized as  a  basis  for  profits,  so  long  as  a  buyer  may 
allege  the  purchase  price  as  a  reason  for  the 
return  that  he  is  receiving,  there  is  no  Hmit  to 
the  amount  of  profits  that  the  coal  land  owners 
may  make  on  their  anthracite  properties.  The 
consumer  will  find,  added  to  the  price  which  he 
is  expected  to  pay  for  his  coal,  a  steadily  increas- 
ing amount,  representing  the  monopoly  power  of 
the  coal  land  owners. 

Under  the  present  system  of  estimating  profits 
there  is  no  possible  basis  for  determining  the 
adequacy  of  profits.  The  profits  now  being  made 
by  the  coal  owners,  if  calculated  in  terms  of  the 
present  value  of  the  anthracite  land,  perhaps  are 
not  excessive.  If  calculated  in  terms  of  the  cost 
of  the  same  land  fifty  years  ago,  they  would  be 
grotesque.  A  generation  hence,  imder  the  pres- 
ent system  of  resource  ownership,  the  anthracite 
coal  lands  may  be  worth,  per  acre,  twice  what 
they  are  worth  today.  Suppose  that  they  were. 
Then  the  present-day  profit  of,  let  us  say  8  per 
cent,  would  be  reduced  to  4  per  cent.  Surely, 
that  is  not  a  fair  return  on  the  investment !  The 
logic  of  the  situation  will  require  the  addition 


PROFITS  177 

to  the  price  of  the  coal  of  an  amount  sufficient 
to  continue  the  payment  of  8  per  cent;  and  this 
procedure  will  be  followed  in  the  face  of  the  fact 
that  the  increase  in  the  value  of  the  property  is 
due  solely  to  the  activities  of  the  community, 
and  of  the  further  fact  that  during  half  a  century 
the  owners  of  the  coal  land  have  made  net  profits 
equal  to  many  times  the  original  purchase  price 
of  the  land  for  mining  purposes. 

The  profits  made  by  the  anthracite  owners 
are  clearly  far  in  excess  of  the  "cost  of  produc- 
tion plus  a  reasonable  profit"  idea,  on  which  the 
statement  of  fair  profits  is  ordinarily  based.  At 
the  same  time,  since  the  cost  price  of  the  prop- 
erty to  its  present  owners  plus  the  rise  in  land 
value  which  has  occurred  since  the  purchase,  may 
be  taken  into  consideration,  the  term  "reason- 
able profit"  means  nothing  because  of  the  lack 
of  a  stable  base  on  which  the  reasonableness  of 
profits  may  be  calculated. 


CHAPTER  6 

A    CONCRETE    EXAMPLE — THE    CONFLICT    OF     1912 

1 .  The  Apparent  Advantage  oj  the  Operators 

The  evidence  presented  thus  far,  dealing  with 
prices,  wages  and  profits,  would  lead  to  the  gen- 
eral conclusion  that  the  operators  have  the  best 
of  it.  The  consumers  are  paying  more  for  their 
product;  the  workers  are  fortunate  if  they  keep 
pace  with  the  rising  cost  of  living.  The  oper- 
ators, since  the  effective  combination  of  1898, 
exhibit  every  ear-mark  of  prosperity. 

The  general  facts  seem  to  favor  the  operators. 
Specific  instances  afford  excellent  illustrations  of 
the  way  in  which  their  monopoly  power  has 
been  turned  to  excellent  advantage. 

Shortly  after  the  formation  of  the  anthracite 
combination  in  1898,  two  increases  in  wages  were 
granted  to  the  anthracite  workers  (1900  and 
1902).  This  increase  in  the  labor  costs  was  con- 
verted at  once  into  higher  prices.  Furthermore, 
it  was  used  as  a  pretext  for  additional  advance  in 
coal  prices.  Stove  coal  sold,  wholesale,  at  $3.70 
in  1899,  $3.94  in  1900,  $4.32  in  1901,  $4.46  in 
1902  and  $4.82  in  1903.  From  1903  until  1911  it 
remained  at  about  $4.82.  Since  the  settlement  fol- 
lowing the  strike  of  1912  it  has  been  about  $5.06. 

The  anthracite  strike  of  1902  gave  the  operators 
the  real  opportunity  to  advance  coal  prices.  At 
the  beginning  of  the  strike  (May,  1902)  coal,  with 

(178) 


THE     CONFLICT  179 

the  regular  discount  off,  was  selling  at  $4.02. 
By  the  end  of  the  strike  (November,  1902)  the 
price  was  $4.95.  From  that  time  until  1913,  the 
November  price  of  anthracite  remained  at  $4.95. 

To  what  extent  was  this  advance  justified  by  the 
increase  in  wages  granted  in  1900  and  1902? 

The  question  cannot  be  answered  with  absolute 
certainty.  Professor  Jones,  commenting  on  the 
point,  says  (p.  158):  "It  is  a  difficult  matter  to 
make  a  wholly  satisfactory  estimate  of  the  extent 
to  which  the  higher  price  merely  offsets  an  increase 
in  the  cost  of  mining,  as  this  cost  varies  so  much 
for  the  different  companies,  and  in  the  different 
mines  of  the  same  company,  and  because  of  the 
difficulty  of  allocating  to  any  one  size,  such  as 
stove  coal,  for  example,  those  elements  in  the 
expenses  of  mining  which  are  properly  chargeable 
to  this  one  size — inasmuch  as  all  sizes  are  produced 
together  under  joint  cost." 

A  few  available  figures,  covering  this  early 
period,  give  some  idea  of  the  extent  to  which  an 
increase  in  wages  meant  increased  profits  to  the 
operators  and  increased  prices  to  the  consumers. 

Figures  submitted  by  the  Delaware  and  Hud- 
son Company  to  the  Interstate  Commerce  Com- 
mission are  summarized  as  follows : 


Price 
Received 

Pavrolls 
Other 
than 
Office 

Cost  of 
Mining 

1900 

$3.20 

$1.16 

11.43 

1901 

3.57 

1.24 

1.54 

1902 

3.87 

1.46 

1.93 

1903 

4.10 

1.53 

1.96 

180  ANTHRACITE 

During  foiir  years  the  labor  cost  of  the  coal  in- 
creased 37  cents  (32  per  cent),  the  entire  cost  of 
mining  increased  53  cents  (37  per  cent),  and  the 
price  received  for  all  sizes  of  coal  increased  90 
cents  (27  per  cent).  On  the  face  of  things  the 
operators  were  modest — raising  the  price  only  27 
per  cent,  as  compared  with  an  increase  in  the  total 
cost  of  mining  of  37  per  cent.  Actually,  the 
increase  in  cost  was  53  cents  and  the  increase  in 
price  90  cents,  leaving  for  the  operator  on  each 
ton  of  coal  sold,  a  net  advantage  of  37  cents. 

The  increase  in  the  price  of  anthracite  from 
1900  to  1903  may  be  justified,  in  part  only  by  the 
increase  in  wage  rates.  A  large  slice  of  the 
increase  goes  to  increased  profits. 

The  same  facts  hold  true  for  figures  submitted 
in  the  Sherman  Anti-Trust  case  by  the  Philadel- 
phia and  Reading  Coal  and  Iron  Company. 
Mining  costs,  including  wages,  supplies,  improve- 
ments and  general  expenses,  rose  from  $1.59  in 
1899  to  $2.20  in  1903— an  increase  of  61  cents, 
or  38  per  cent.  The  price  received  for  all  sizes 
of  coal  rose  from  $1.84  to  $2.63 — an  increase  of 
79  cents,  or  43  per  cent.  In  this  case  the  price 
received  actually  rose  higher  in  percentage  than 
the  percentage  of  increase  in  labor  costs. ^ 

Labor  disturbances  have  been  very  successfully 
employed  in  late  years  by  the  anthracite  opera- 
tors as  a  means  of  increasing  coal  prices.  Public 
sympathy  is  won  for  the  transaction  by  a  simple, 
psychological   trick.      Wages  were  increased    10 

I  "The  Anthracite  Coal  Combination,"  op.  cit.,  pp.  153-59. 


THE     CONFLICT  181 

per  cent  in  1902.  Is  it  not  just  and  right  that  the 
operator  should  be  able  to  make  good  this  extra 
cost  by  an  addition  to  the  price'  of,  let  us  say, 
10  per  cent  ?  The  statement  is  simple,  nor  does  it 
occur  to  the  ordinary  consumer  of  coal  that  the 
increase  in  wages  raised  only  the  labor  cost  of 
the  coal.  The  labor  cost  in  1902  was  for  one 
company  (the  Delaware  and  Hudson)  $1.46. 
Ten  per  cent  of  this  labor  cost  is  14.6  cents.  The 
coal  was  selling  at  something  over  $5  to  the 
consumer.  Ten  per  cent  of  $5  is  fifty  cents.  The 
10  per  cent  is  the  same  in  each  case.  The  amount 
on  which  the  percentage  is  taken  varies  so  much 
in  the  two  cases  that  more  than  three  times  as 
much  money,  on  each  ton  of  coal,  is  taken  by  the 
operator  from  the  consumer  as  is  given  by  the 
operator  in  the  increased  wages  of  the  workers.  - 

2.  A  Typical  Situation 

The  most  complete  body  of  evidence  bearing  on 
the  relation  between  increased  labor  costs  and 
increased  prices  was  collected  by  the  United 
States  Bureau  of  Labor  in  1912.^^  There  was  a 
suspension  of  work;  a  sharp  price  increase  in 
many  sections,  based  on  coal  shortage;  and  a 
final  settlement  that  gave  the  miners  10  per  cent 
more  wages,  while  it  abolished  the  sliding  scale, 
and  raised  the  price  of  coal  about  25  cents  per 


1"  Increase  in  Prices  of  Anthracite  Coal  following  the  Wage  Agreement  of 
May  20,  1912."  Prepared  under  the  direction  of  the  U.  S.  Commissioner  of 
Labor  by  Basil  M.  Manly.  House  Document  1442,  62d  Congress,  3d  Session. 
A  remarkably  clear  and  detailed  presentation  of  the  case. 


182  ANTHRACITE 

ton.  The  case  is  typical  of  the  relations  between 
labor,  capital  and  the  consumer  of  anthracite. 

After  a  suspension  lasting  six  weeks,  an  agree- 
ment was  signed,  May  20,  1912,  under  which  the 
wages  of  the  miners  were  increased,  the  price  of 
coal  was  raised  and  the  operators  reaped  a  rich 
harvest  of  increased  net  profits.  If  the  matter 
is  examined  in  detail,  it  appears  that  the  increase 
in  wages  was  considerably  less  than  the  correspond- 
ing increase  in  the  cost  of  living  between  1903  and 
1912;  that  the  increase  in  the  price  of  coal  to 
the  consumer  was  considerably  in  excess  of  the 
increase  in  the  cost  of  producing  the  coal;  and 
that  there  was  a  marked  increase  in  profit  to  the 
coal  companies.  As  an  outcome  of  this  one  situ- 
ation, labor  was  a  net  loser,  the  operators  were  the 
net  gainers  and  the  consumers  paid  the  bill. 

The  award  of  the  Anthracite  Coal  Strike  Com- 
mission made  in  1903,  had  continued  practically 
unchanged  by  the  agreements  of  1906  and  1909. 
Some  marked  alterations  were  brought  about  as  a 
result  of  the  conflict  of  1912. 

The  1903  agreement  provided  for  a  wage  pay- 
ment based  on  the  wholesale  price  of  coal  at  tide- 
water. "For  each  increase  of  5  cents  in  the  price 
of  white  ash  coal,  of  sizes  above  pea  coal  .  .  . 
above  $4.50  per  ton,  the  employees  shall  have  an 
increase  of  1  per  cent  in  their  compensation." 
(Award  of  1903,  Sec.  VIII.)  Under  the  operation 
of  this  "sliding  scale,"  the  mine  workers  received 
an  increase  in  wages  over  the  minimum  figure  of 
4  per  cent  in  1903 ;  and  this  percentage  of  increase 


THE     CONFLICT  183 

varied  from  1903  to  1911,  when  it  was  4|  per  cent. 
At  its  lowest,  it  was  3|  per  cent;  at  its  highest 
(1912),  7  per  cent.  The  average  per  cent  of 
increase  received  by  the  mine  workers  under  the 
sHding  scale  during  the  nine  years  of  its  existence 
was  4.2  per  cent. 

The  agreement  of  1912  abolished  the  sliding 
scale,  but  in  its  place  there  was  a  provision  for  an 
increase  of  10  per  cent  over  the  wage  rates  pro- 
vided for  in  the  award  of  1903. 

Following  their  agreement  with  the  workers, 
the  operators  increased  the  wholesale  prices  of 
coal  an  average  of  25.82  cents  per  ton.^  This 
figure  is  secured  by  comparing  the  prices  of  coal 
in  June,  July,  August  and  September,  1911,  with 
the  prices  in  the  corresponding  months  of  1912. 
This  increase  in  wholesale  prices  resulted  in  a  cor- 
responding increase  in  retail  prices  and  the  con- 
simiers  were  compelled  to  shoulder  the  added 
burden. 

The  operators  explained  that  the  increase  in 
wholesale  prices  of  coal  was  made  necessary 
because  (1)  of  the  advance  in  wages  resulting 
from  the  agreement  of  May  20,  1912;  and  (2) 
because  of  the  increases  in  the  cost  of  production 
which  had  taken  place  between  1902,  the  date  of 
the  last  increase  in  the  wholesale  prices  of  coal, 
and  1912.  These  increases  were  caused  by  the 
growing  difficulties  of  mining,  by  additional  taxes 
and  more  stringent  mining  laws.^ 

•"Increase  In  Prices  of  Anthracite  Coal,"  op.  cit.,  p.  11. 
s  Ihid.,  p.  12. 


184  ANTHRACITE 

The  public  discontent  which  was  aroused  by  the 
higher  anthracite  prices  led  to  an  investigation  of 
coal  prices.  The  House  of  Representatives  ordered 
the  investigation  which  was  made  for  the  Commis- 
sioner of  Labor  by  Mr.  Basil  M.  Manly.  The  ma- 
terial secured  in  the  course  of  this  investigation 
furnishes  the  data  on  which  this  chapter  is  based. 

Mr.  Manly  was  able  to  secure,  through  the 
Bureau  of  Labor,  a  large  amount  of  information 
regarding  the  operations  of  most  of  the  important 
anthracite  companies.  He  reports  furthermore, 
that  "in  every  case  the  statistics  presented  by 
the  companies  have  been  checked  as  far  as  possible 
either  against  the  books  of  the  companies  from 
which  they  were  derived  or  against  the  public 
records  of  the  company,  the  correctness  of  which 
have    been    certified   by   public    accoiuitants."^ 

The  facts  regarding  wholesale  prices  include 
about  70  per  cent  of  all  the  anthracite  coal  sold. 
The  facts  regarding  cost  of  production  include 
about  54  per  cent  of  the  entire  output  of  the 
region.  The  Congressional  report  is  therefore 
based  on  the  facts  furnished  by  the  coal  com- 
panies themselves;  these  facts  were  checked 
wherever  possible  against  public  records,  and  the 
material  represents  a  majority  of  the  business 
done  in  the  coal  regions. 

3.  The  Consumer  in  1912 

The  consumer  was  an  unqualified  loser  in  the 
events  surrounding  the  1912  settlement.     Whole- 

^"Increase  in  Prices  of  Anthracite  Coal,"  op.  cit.,  p.  10. 


THE     CONFLICT  185 

sale  prices  were  increased  about  25  cents  per  ton 
and  retail  prices  were  increased  from  25  to  50  cents 
per  ton.  In  this  case,  as  in  many  that  have  pre- 
ceded and  that  will  follow  it,  the  consiimer  is 
called  upon  to  foot  the  bill. 

No  sooner  had  the  operators  granted  the  increase 
in  wages  in  the  agreement  of  May  20,  1912,  than 
they  issued  a  circular  prescribing  increases  in 
wholesale  prices  varying  with  the  size  of  the  coal. 
The  prepared  sizes  (including  chestnut  and  larger 
sizes)  were  increased  an  average  of  31.23  cents 
per  ton.  The  price  of  pea  and  the  smaller  steam 
sizes  of  coal  was  increased  16.14  cents  per  ton. 

The  prepared  sizes  are  consumed  principally  in 
domestic  use,  while  the  steam  sizes  are  used  by 
the  manufacturers  and  owners  of  apartment 
houses,  office  buildings  and  other  public  structures. 
' '  The  reason  for  placing  the  larger  increase  on  the 
prepared  sizes  is  said  by  the  coal  operators  to  be 
due  to  the  inability  to  sell  the  steam  sizes  in  com- 
petition with  bituminous  coal  at  any  greater  ad- 
vances than  those  which  were  made."^ 

The  decision  of  'the  operators  to  increase  the 
price  of  domestic  sizes  31  cents  at  the  same  time 
that  they  increased  the  price  of  "steam  sizes  16 
cents  deserves  consideration.  From  the  moment 
it  was  decided  that  the  miners  should  have  an 
increase  in  wages,  the  operators  began  casting 
about  for  a  means  of  saddling  the  increase  on  the 
consumers  of  coal.  Here,  as  in  any  other  case  of 
monopoly  power,   the  rule  on  which  prices  are 

1  "Increase  in  Prices  of  Anthracite  Coal,"  op.  cil.,  p.  57. 


186  ANTHRACITE 

fixed  is  found  in  the  famous  railroad  axiom,  "all 
that  the  traffic  will  bear."  The  price  is  therefore 
fixed  at  the  highest  profitable  point.  Had  the 
prices  of  anthracite  steam  sizes  been  raised  more 
than  16  cents,  the  users  of  these  sizes  woiild  have 
abandoned  anthracite  in  favor  of  bituminous  coal. 
The  16-cent  increase  represented  the  limit  of  the 
operators'  monopoly  power  in  that  direction. 

The  consinners  of  domestic  sizes  of  anthracite 
coal  presented  a  much  easier  mark  than  the  users 
of  steam  sizes.  The  average  householder  prefers 
anthracite  to  bituminous  coal  because  it  makes 
less  dust  and  dirt.  Then,  too,  his  rented  furnace 
is  built  to  burn  anthracite  and  his  experience  is 
wholly  with  the  use  of  anthracite.  If  he  lives 
in  a  rented  house,  as  more  than  two-thirds  of  the 
city  and  town  dwellers  do,  and  if  he  has  acquired 
the  habit  of  burning  anthracite,  the  danger  that 
he  will  abandon  anthracite  in  favor  of  soft  coal 
is  remote.  He  is  therefore  a  peculiarly  fit  subject 
for  the  exaction  of  a  monopoly  tribute.  It  is  for 
this  reason  that  the  price  of  domestic  sizes  was 
increased  by  about  twice  as  much  as  the  price  of 
steam  sizes  during  the  1912  readjustment. 

The  added  cost  of  anthracite  to  the  consumers 
which  resulted  from  the  1912  price  increase,  is 
estimated  by  Mr.  Manly  at  $10,832,843.  Fully 
two-fifths  of  this  amount  covers  the  increase  in 
chestnut  coal,  which  is  the  most  widely  used  of  all 
the  domestic  sizes. ^ 

The  consimier  suffered  another  heavy  loss  owing 

»  "Increase  in  Prices  of  Anthracite   Coal,"  op.  cit.,  p.  55. 


THE     CONFLICT  187 

to  the  passing  of  the  discounts  on  prepared  sizes 
during  the  spring  and  summer  of  1912.  For  a 
number  of  years  it  has  been  customary  to  allow 
purchasers  discoimts  of  50  cents  per  ton  in  April, 
40  cents  per  ton  in  May,  30  cents  in  June,  20  cents 
in  July  and  10  cents  in  August  on  prepared  sizes. 
The  object  of  this  discount  was  to  induce  people 
to  lay  in  their  winter  supply  of  coal  in  the  spring 
and  thus  make  work  for  the  mines  during  the 
spring  and  summer  months.  The  usual  discount 
was  not  allowed  during  1912.  This  suspension  of 
discounts  alone  cost  the  consumer,  according  to 
the  estimate  made  by  the  Bureau  of  Labor,  about 
$2,500,000. 

In  addition  to  the  increase  in  the  regular  price 
of  coal  and  to  the  suspension  of  the  usual  discoimts, 
there  were  a  considerable  number  of  cases  in  which 
coal  was  sold  at  a  premiiim  over  current  whole- 
sale prices.  In  some  cases  this  premium  is  re- 
ported to  have  gone  as  high  as  $2.00  per  ton  above 
the  prevailing  circular  prices  for  the  same  grade 
and  quality  of  coal. 

The  possibility  of  selling  anthracite  at  a  pre- 
mium arose  from  the  shortage  due  to  the  suspen- 
sion of  operations  in  the  early  part  of  the  year. 

There  were  a  number  of  communities,  notably 
in  New  England,  where  the  retail  dealers  sold  coal 
at  scarcity  prices.  Although  this  practice  was 
not  widespread,  it  proved  a  serious  additional 
burden  where  it  was  in  vogue. 

Although  it  is  impossible  to  estimate  accurately 
the  increased  burden  placed  upon  the  consumer 


188  ANTHRACITE 

by  the  strike  of  1912,  it  is  the  Bureau  of  Labor 
estimate  that  the  increase  in  prices  and  the  sus- 
pension of  discounts  alone  forced  the  consumer  to 
pay  $13,450,000  more  for  his  coal  at  1912  prices 
than  he  had  been  compelled  to  pay  at  1911  prices. 
This  additional  expenditure  of  $13,500,000  brought 
not  one  iota  of  benefit  to  the  consumers.  Indeed, 
it  is  accompanied  in  many  cases  by  inconve- 
nience and  dissatisfaction.  The  $13,500,000  of 
added  cost  bought  the  same  number  of  tons  of 
coal,  containing  the  same  number  of  heat  units 
and  prepared  under  the  identical  conditions. 

4.  The  Worker  in  1912 

The  consumer  paid  the  entire  bill  incident  to  the 
1912  price  increase.  He  was  forced  to  add  more 
than  $13,000,000  to  the  cost  of  his  coal.  It  seems 
evident  that  someone  must  have  profited  con- 
siderably by  the  transaction,  and  the  general 
supposition  is  that  that  someone  was  the  mine 
worker. 

Oddly  enough,  and  public  opinion  notwithstand- 
ing, the  mine  worker  seems  to  have  gained  com- 
paratively Httle  by  the  1912  agreement.  Indeed, 
it  undoubtedly  represented  a  net  loss  for  him,  as 
compared  with  his  position  in  1903.  The  mine 
worker  certainly  cannot  be  accused  of  getting  the 
lion's  share  of  the  price  increase.  Only  a  little 
more  than  one-third  of  it  came  his  way.  The 
Bureau  of  Labor  reports  that  "a  careful  computa- 
tion based  on  the  records  of  one  of  the  largest 
companies  shows  that  the  increase  in  labor  cost 


THE     CONFLICT  189 

resulting  from  the  agreement  of  1912  and  the 
readjustment  of  the  wages  of  men  not  covered  by 
the  agreement,  amounted  to  9.75  cents  per  ton."^ 
At  the  same  time,  it  will  be  remembered  that 
coal  prices  increased  on  the  average  more  than  25 
cents  per  ton. 

The  mine  worker  did  benefit  immediately  and 
directly  by  the  strike.  The  advance  in  wages 
which  the  abolition  of  the  sliding  scale  and  the 
increase  of  10  per  cent  over  the  wage  of  1903 
provided,  gave  an  increase  of  5.6  per  cent  in  w^age 
rates.  Estimating  the  amount  of  this  increase 
upon  the  basis  of  the  shipments  from  June  to 
December,  1912,  the  miners  gained  about  $4,000- 
000.  Against  this  amount  there  must  be  placed 
the  cost  of  the  strike  in  money  and  in  privation. 

The  miners'  demands  for  1912  included  a  20 
per  cent  increase  in  wages.  They  actually  received 
a  net  increase  of  5.6  per  cent.  What  did  this 
mean  to  them  in  comparison  with  the  increased 
cost  of  living  during  the  same  period  of  years? 

The  United  States  Department  of  Labor  shows, 
in  Bulletin  140,  that  the  cost  of  food  increased 
30.8  per  cent  between  1903  and  1912.  During 
the  same  years  the  cost  of  clothing,  shoes  and  the 
like  increased  approximately  20  per  cent.  While 
no  extensive  study  has  been  made,  it  seems  that 
the  cost  of  rent  in  the  anthracite  fields  has  in- 
creased during  the  same  time  from  10  to  20  per 
cent.  Figuring  the  food  as  two-fifths  of  the 
workingman's  expenditure ;   and  rent  and  clothing 

*  "Increase  in  Prices  of  Anthracite  Coal,"  op.  cit.,  p.  28. 


190  ANTHRACITE 

each  as  one-fifth,  the  apparent  increase  in  the 
cost  of  living  would  be  from  20  to  25  per  cent. 
The  increase  in  the  wage  rate  between  1903  and 
1912  was  therefore  less  than  one-third  of  the 
increase  in  the  cost  of  living. 

There  is  one  additional  factor  which  must  be 
borne  in  mind,  and  that  is  that  the  anthracite 
miner  had  more  opportunities  to  work  in  1912 
than  he  had  in  1903.  The  total  days  worked  by 
the  anthracite  mines  in  1912  were  231;  and  in 
1903,  206.  This  was  an  increase  of  13  per  cent 
in  working  time.  Even  counting  this  working 
time  as  a  part  of  the  benefits  accruing  to  the  miner 
during  the  interval  between  1903  and  1912,  the 
miner's  increase  in  earnings  did  not  make  amends 
for  higher  prices. 

The  conflict  of  1912  left  the  mine  workers  still 
behind  in  their  race  with  the  cost  of  living,  even 
though  they  gained  $4,000,000  in  additional  wages. 
The  gain  of  $4,000,000  was  immediate.  The  loss 
through  increased  prices  was  permanent. 

5.  The  Operators  in  1912 

The  Bureau  of  Labor  estimates  that  the  oper- 
ators added  $13,450,000  to  their  gross  receipts 
as  a  result  of  the  1912  strike.  They  were  enabled 
to  do  this  because  of  the  increase  in  wholesale 
prices  and  the  suspension  of  discounts  already 
noted.  They  had  a  further  source  of  revenue  in 
the  sale  of  contract  coal. 

Until  the  decision  of  the  United  States  Supreme 
Court  in  December,  1912,  the  anthracite  railroads 


THE     CONFLICT  191 

purchased  under  contract  the  entire  output  of  a 
large  niimber  of  colHeries  operated  by  individuals 
and  companies.  Under  these  contracts,  the  price 
paid  for  prepared  sizes  is  65  per  cent  of  the  aver- 
age tidewater  price.  When  the  price  of  coal  was 
increased  in  June,  1912,  these  contracts  were  not 
changed,  and  consequently  the  independent  com- 
panies, selling  on  this  basis,  received  only  65 
per  cent  of  the  25-cent  increase  in  the  price  of 
prepared  sizes  at  tidewater,  or  16.25  cents  per  ton, 
while  the  purchasing  operators  received  35  per 
cent  of  the  increase,  or  8.75  cents  per  ton.  The 
independent  operators  paid  their  miners  the  same 
increase  in  wages  as  the  larger  coal  companies 
and  were  probably  subject  to  the  same  general 
operating  conditions.  The  independent  com- 
panies received  an  addition  of  16|  cents  per  ton 
in  the  price  and  paid  an  advance  of  9  cents  per 
ton  in  wages,  leaving  a  margin  of  7|  cents  to 
cover  the  other  increased  costs.  The  purchasing 
companies,  on  the  other  hand,  had  a  margin  of 
16  cents  (25  cents  minus  9  cents)  on  their  own  coal, 
plus  8.75  cents  on,  each  ton  that  they  purchased 
and  sold  under  the  65  per  cent  contracts.^  Here, 
then,  was  an  additional  source  of  revenue  for  the 
larger  operating  and  purchasing  companies. 

There  seems  to  be  some  basis  for  the  operators' 
assertion  that  the  cost  of  producing  coal  had 
increased.  The  agreement  of  1912  added  9  cents 
burden  to  the  labor  cost  of  coal.  Meanwhile, 
between    1903  and   1912,    a   number   of   factors 

1  "Increase  in  Prices  of  Anthracite  Coal,"  op.  ciU,  p.  13. 


192  ANTHRACITE^ 

were  responsible  for  adding  to  the  cost  of  pro- 
duction. 

1.  The  veins  worked  were  growing  thin- 

ner, which  necessitated  the  removal 
of  a  larger  amount  of  rock  and 
refuse. 

2.  The   increasing    depth    and   area   of 

mines  added  to  the  cost  of  trans- 
porting and  handling  of  coal  and  of 
ventilating  the  mine. 

3.  Many  of  the  materials  entering  into 

mine  construction  had  increased 
in  price. 

There  are^a  number  of  decreasing  production 
costs  which  must  be  set  off  against  those  which 
have  increased.  For  example,  most  iron  and  steel 
was  lower  in  1911  than  in  1903.  During  that 
time  advances  had  been  made  in  economy  and 
efficiency  of  mining,  cleaning,  preparing  and 
hauling  coal.  Mr.  E.  B.  Thomas,  president  of 
the  Lehigh  Valley  Coal  Company,  is  quoted  as 
saying,  "The  improvements  already  made,  to- 
gether with  those  now  in  progress,  tend  not  only 
to  offset  the  increased  expense  in  mining,  incident 
to  the  greater  depth  of  the  working  and  the  long 
underground  haul,  but  also  result  in  a  greater 
percentage  of  prepared  sizes  of  coal,  the  same 
having  increased  9.38  per  cent  in  the  last  five 
years.  "^ 

The  status  of  production  costs  is  thus  stmima- 

1  Annual  Report  of  the  Lehigh  Valley  Railroad  Company,  1908,  p.  48. 


THE     CONFLICT  193 

rized  in  the  Federal  report:  "The  present  report 
shows  that  the  recent  increases  in  prices  have 
been  more  than  sufficient  to  compensate  ftilly 
those  companies  whose  costs  of  production  have 
increased  more  rapidly  during  recent  years,  and 
at  the  same  time  has  very  greatly  increased  the 
profits  of  those  companies,  of  whom  there  are  at 
least  several  whose  costs  of  production  either 
decreased  or  remained  stationary  during  the  same 
period. 

"This  conclusion  is  based  on  the  fact  that  when 
normal  years  are  compared,  none  of  the  com- 
panies has  suffered  an  increase  in  the  cost  of  pro- 
duction equal  to  the  increase  in  the  selling  price 
over  and  above  the  recent  advance  in  wages." 
As  a  result  of  the  increased  activity  following  the 
suspension  of  1912,  "the  cost  of  production  of  one 
important  company  has  been  lower  during  the 
last  six  months  of  1912  than  during  any  year 
since  1903,  in  spite  of  the  increase  in  wages 
required  by  the  settlement  of  May  20,  1912. 
These  comparatively  low  production  costs  during 
the  latter  half  of  1912,  combined  with  the  in- 
creased prices,  have  created  for  this  company 
during  the  six  months  net  earnings  greater  than 
it  has  had  in  any  entire  year  from  1902  to  date."^ 

The  total  result  for  the  operators  was  an  im- 
mense increase  in  net  receipts.  "During  the  four 
months — Jime  to  September,  1912 — the  seven 
companies  which  shipped  69.3  per  cent  of  the 
anthracite  coal  during  the  same  period  received 

'"Increase  in  Prices  of  Anthracite  Coal,"  op.  cit.,  pp.  12-13. 
13 


194  ANTHRACITE 

at  the  advanced  prices  for  their  shipments  $3,- 
572,588  more  for  their  coal  than  they  would  have 
received  at  the  prices  prevailing  in  the  same 
months  in  1911."  This  is  equivalent  to  an  aver- 
age of  25.82  cents  per  ton  advance  over  1911 
prices. 

6.  Some  Lessons  from  the  1912  Experience 

The  incidents  surrounding  the  suspension  of 
1912  verify  the  impressions  gained  from  previous 
experiences  with  labor  disturbances  in  the  anthra- 
cite industry. 

The  operators,  controlling  a  great  natural  re- 
source, get  what  they  can  for  their  product. 
The  price  of  those  anthracite  sizes  that  compete 
with  bituminous  coal  was  increased  by  only  half 
as  much  as  were  the  prices  of  the  "prepared 
sizes"  which  are  used  in  domestic  consumption 
and  do  not  compete  with  bituminous  coal.  The 
strike,  as  in  previous  cases,  was  used  as  a  pretext 
for  adding  to  prices  an  amount  equal  to  three 
times  the  increased  labor  cost  of  the  coal.  This 
gave  to  the  coal  companies  a  handsome  profit  of 
$13,000,000  in  1912  and  probably  $10,000,000  in 
subsequent  years. 

The  mine  workers,  after  having  perfected  their 
organization  and  waged  a  costly  struggle,  found 
themselves,  at  the  end  of  the  struggle,  still  unable 
to  cope  with  the  increase  in  the  cost  of  living. 

The  constmiers  fared  worst  of  all.  They  paid 
a  roimd  increase  of  $13,000,000  for  their  coal  in 
1912,  over  the  1911  prices;   they  got  no  more  and 


THE     CONFLICT  195 

no  better  coal  in  return  for  this  immense  price 
increase. 

The  struggle  of  1912  came  and  went.  The 
operators  profited  handsomely,  the  miners  fared 
indifferently,  and  the  consumer  foots  the  bill. 


CHAPTER  7 

AN    OBJECT    LESSON    IN   MONOPOLY 

1.  The  Anthracite  Lesson 

The  lesson  taught  by  the  anthracite  situation 
is  unmistakable.  The  advantages  and  dis- 
advantages of  the  private  monopoly  of  natural 
resources  are  clearly  portrayed.  The  conclusion 
cannot  be  avoided. 

The  situation  is  stated  in  the  body  of  facts 
presented  in  the  last  three  chapters.  The  con- 
sumer, the  worker,  and  the  producer  each  face 
certain  aspects  of  the  issue.  In  its  larger  form, 
and  summarized,  the  question  resolves  itself  into 
a  consideration  of  the  price  of  coal  to  the  con- 
sumer, the  rate  of  wages  to  the  worker  and  the 
rate  of  profits  to  the  operator.  The  consumer  is 
better  off  when  his  dollar  buys  a  larger  quantity 
of  coal;  the  worker  is  potentially  better  off  when 
he  receives  a  higher  rate  of  return  for  each  hour 
or  for  each  unit  of  labor;  the  producer  is  pre- 
sumably better  off  when  he  receives  a  larger  per- 
centage of  return  on  each  dollar  of  investment. 

A  summary  of  the  relative  position  of  con- 
sumer, worker  and  producer  during  the  past  fifteen 
years  under  the  effective  anthracite  combination 
of  1898,  appears  below.  The  position  of  the  con- 
sumer is  stated  in  the  relative  number  of  tons 
of  stove  coal^  that  $10  will  buy  at  New  York 

1  The  prices  of  egg,  chestnut  and  pea  advanced  faster  between  1900  and 
1912  than  did  the  price  of  stove  coal. 

(196) 


MONOPOLY  197 

wholesale  prices;  the  position  of  the  worker  is 
stated  in  the  rate  of  wages  per  hour  or  per  unit 
of  work;  and  the  position  of  the  producer  is 
stated  in  terms  of  dividend  rates.  Tons  of  coal, 
wage  rates  and  dividend  rates  are  all  reduced,  in 
the  table,  to  index  numbers:^ 

Table   XIV. — Index   Numbers   for   Prices,   Wage   Rates, 
AND    Dividend    Rates    in    the    Anthracite    Industry, 
1900  to  1914.     The  Figures  for  1900  to  1904  Equal  lOO.i 
CONSUMER.      WORKER.      OWNER. 

PURCHASING  WAGE  RATE  OF 

POWER.  RATES.  DIVIDENDS. 

Number  Wages  Average 

of  Tons  Paid  to  Dividend 

for  $10  Miners  Rate 

1900 113  95  85 

1901 104  95  98 

1902 100  95  75 

1903 92  108  114 

1904 92  108  159 

1905 92  108  242 

1906 92  108  268 

1907 92  108  281 

1908 92  108  278 

1909 92  108  461 

1910 92  108  281 

1911 92  108  395 

1912 88  114  287 

1913 88  114  284 

1914 88  114  272 

1  The  method  of  finding  the  index  number  is  as  follows:  The  number  of  tons 
of  coal  that  could  be  bought  for  $10  is  ascertained  for  each  year  by  dividing 
the  price  of  one  ton  Into  510.  The  average  for  the  first  five  years  (2.25  tons)  is 
taken  as  a  base.  Arbitrarily  it  is  stated  as  100.  The  number  of  tons  that  the 
consumer  received  in  1900  for  110  was  2.54.  If  2.54  is  divided  by  2.25  (the 
base)  the  quotient  is  113.  The  results  for  each  year  are  computed  on  a  com- 
mon base.  Since  they  have  been  reduced  to  a  common  denominator,  they  can 
be  compared  more  readily  than  in  their  original  form.  Since  the  percentages  or 
index  numbers  for  prices,  wages  and  dividends  are  all  secured  in  the  same  way, 
they  also  may  be  compared. 


198  ANTHRACITE 

The  relative  position  of  the  three  parties  at 
interest  in  the  anthracite  field  during  the  fifteen 
years  since  the  combination  of  1898  became 
effective,. shows  the  owners  to  be  the  real  gainers. 
The  consumer,  in  1900,  could  buy  with  $10  two 
and  a  half  tons  of  stove  coal  at  tidewater  prices. 
By  1914  the  increase  in  prices  reduced  the  amount 
that  he  could  buy  with  $10  to  a  little  less  than 
two  tons.  The  wage-earner  received  an  increase 
in  wages  in  1903  and  in  191 2.^  These  two  advances 
have  bettered  his  position  by  about  one-fifth. 
Meanwhile  the  average  dividends  paid  by  the 
ten  leading  anthracite  railroads  advanced  from 
2.8  per  cent  in  1900  to  9.1  per  cent  in  1914.  As 
compared  with  a  loss  of  20  per  cent  to  the  con- 
simiers  and  a  gain  of  20  per  cent  to  the  workers, 
the  owners  show  a  gain  of  220  per  cent. 

The  situation  becomes  even  more  acute  if  the 
figures  are  compared  for  the  last  five  years, 
rather  than  for  the  year  1914,  which,  from  a 
business  standpoint,  was  improsperous.  During 
the  past  five  years  the  purchasing  power  of  the 
consumer  has  remained  at  about  the  same  figure, 
90,  as  compared  with  113  in  1900.  The  wages 
of  the  workers  have  increased  slightly,  making 
a  figure,  for  the  five-year  period,  of  about  112, 
as  compared  with  95  in  1900.  The  average  divi- 
dends of  the  anthracite  carriers  in  the  past  five 
years  have  been  306,  as  compared  with  85  in 
1900.  The  consumer's  purchasing  power  shows 
a   slight   decrease,    the   worker's   wage   a   slight 

1  There  was  also  an  increase  of  10  per  cent  early  in  1900. 


MONOPOLY  199 

increase  and  the  owner's  rate  of  profits  an  in- 
crease, for  the  five-year  period,  of  260  per  cent. 

The  profits  as  stated  here  are  the  apparent 
profits  in  the  form  of  dividend  rates  on  the  com- 
mon stock.  They  make  no  allowance  for  increase 
in  capitalization,  nor  do  they  take  into  consider- 
ation the  fact  that  the  anthracite  business  com- 
prises only  a  part  of  the  business  of  these 
companies.  Unlike  the  price  to  the  consumer 
and  the  wage  rate  to  the  worker,  the  dividend 
rate  is  at  best  merely  an  indication  of  prosperity. 
It  is  neither  an  accurate  nor  final  measure.  Un- 
fortunately, it  is  the  only  measure  available. 

Since  the  Anthracite  Coal  Combination  got  a 
foothold  the  workers  have  gained  somewhat,  the 
consumers  have  lost  somewhat.  The  supreme 
advantage  of  this  monopoly  period  has  gone  to 
the  monopolists. 

2.  The  Losers  and  the  Gainers  from  Monopoly 

Anthracite  is  only  one  of  the  many  important 
natural  resources  that  is  being  rapidly  monopol- 
ized through  the  successful  efforts  of  financial 
and  industrial  leaders  to  concentrate  ownership. 
The  lessons  drawn  from  the  anthracite  monopoly 
may  justly  be  regarded  as  significant  and,  in  a 
large  sense,  typical  of  the  results  that  will  follow 
from  the  monopoly  of  other  equally  important 
natural  resources. 

The  consumer  carries  the  burden  of  monopoly. 
Monopoly  prices  are  fixed  at  a  figure  represent- 
ing "all  that  the  traffic  will  bear."      Increased 


200  ANTHRACITE 

costs  of  carrying  on  business,  no  matter  what 
their  origin,  are  passed  on  by  the  monopoly  to 
the  consumer  in  the  form  of  increased  prices. 
The  power  of  substituting  some  other  commodity 
for  the  one  that  is  the  subject  of  monopoly  limits 
the  price  that  the  monopolist  may  charge.  Sub- 
ject only  to  this  power  of  substitution,  the  mon- 
opolist gets  all  that  he  can. 

The  worker  gains  nothing  from  the  presence 
of  monopoly.  As  an  employee  of  the  monopoly, 
he  is  paid  wage  rates  that  are  not  materially 
different  from  the  wage  rates  paid  in  competitive 
industry.  The  present  method  of  fixing  wage 
rates,  by  competition  in  the  open  labor  market, 
makes  it  inevitable  that  this  should  be  so.  In- 
dustry pays  for  labor  not  what  it  can,  but  what 
it  must.  Even  though  a  monopoly  could  afford 
to  pay  a  much  higher  wage  than  a  competitive 
industry,  it  need  not,  and  therefore  does  not,  do  so. 

The  monopolist  is  the  real  gainer  from  mon- 
opoly. The  worker  who  serves  the  monopolist 
is  paid  the  going  rate  of  wages,  and  while  the 
consumer  foots  the  bill,  the  monopolist  records 
his  advantage  in  the  form  of  increased  dividends. 

The  figures  show  conclusively  that  these  things 
are  true  of  anthracite.  There  is  good  reason  to 
believe  that  they  will  hold  no  less  true  for  other 
equally  powerful  natural  resource  monopoHes. 

3.  The  Larger  Menace  of  Monopoly 

The  facts  cited  thus  far  have  referred  to  the 
financial  cost  of  monopoly.     They  are  definite. 


MONOPOLY  201 

They  are  significant.  They  are  the  only  mon- 
opoly facts  that  can  be  measured  in  accurate 
statistical  terms. 

There  are  other  aspects  of  monopoly  which 
are  more  far  reaching  in  their  importance  than 
any  to  which  allusion  has  been  made.  Monopoly 
affects  the  economic,  social  and  political  organiza- 
tions of  society  in  ways  so  fundamental  as  to 
attract  the  attention,  during  late  years,  of  stu- 
dents, agitators,  politicians,  statesmen  and  every 
other  group  of  people  interested  in  progress. 

A  recent  writer  makes  this  statement  regard- 
ing the  relation  existing  between  the  anthracite 
monopoly  and  the  social  order:  "We  have 
referred  to  the  beginnings  of  concentration  of 
wealth  and  ownership  in  the  anthracite  region 
as  one  of  the  causes  of  the  break-up  of  the  Union. 
The  force  of  this  factor  increased  to  such  an 
extent  as  not  only  to  prevent  the  growth  of  the 
Union,  but  practically  to  control  the  industrial, 
social  and  political  welfare  of  the  region."^ 

Monopoly  strikes  at  the  basis  of  social  organiza- 
tion. Monopoly  affects  society,  root  and  branch. 
From  every  angle  it  appears  as  a  menace  to  the 
democratic  future  of  the  community  in  which  it 
exists. 

I^.  The  Economic  Effects  of  Monopoly 

The  economic  effects  of  monopoly  are  of  far- 
reaching  consequence.  Four  will  be  considered 
here.      First,    the    natural    resource    monopolist 

1 " Conciliation  and  Arbitration,"  op.  cit.,  pp.  214-15. 


202  ANTHRACITE 

controls  the  jobs  or  opportunities  for  work; 
second,  he  has  a  price-fixing  power  over  the 
thing  he  produces;  third,  he  has  an  automatic 
income-yielding  machine;  and  fourth,  his  mon- 
opoly power  enables  him  to  appropriate  values 
socially  created.  These  four  economic  effects  of 
natural  resource  monopoly  give  the  monopolist 
a  position  of  overwhelming  advantage. 

First,  and  most  important  to  the  immediate 
interests  of  the  great  mass  of  mankind,  the  natural 
resource  monopolist  controls  the  opportunities 
for  work.  Under  the  conditions  of  modem  in- 
dustry all  men  must  work  for  a  living.  The  ulti- 
mate source  of  Hvelihood  is  the  store  of  wealth 
contained  in  nature's  treasure-house.  The  indi- 
vidual who  becomes  owner  of  a  part  of  this 
treasure-house  may  dictate  to  his  fellow  men  the 
conditions  of  life  to  which  they  must  subject 
themselves  if  they  are  to  use  the  things  that  his 
part  of  the  earth  produces. 

The  owners  of  the  anthracite  regions  are  in  a 
position  of  peculiar  strategic  advantage  because 
the  field  is  so  limited  and  because  they  have  so 
absolute  a  control  over  it.  There  are  175,000 
men  who  work  for  the  anthracite  combination. 
There  is  dependent  on  these  workers  a  population 
of  perhaps  500,000.  The  mine  owners,  in  theory 
at  least,  may  allow  or  deny  these  men  the  oppor- 
tunity to  make  a  living. 

Over  great  sections  of  the  anthracite  field 
there  is  no  other  considerable  source  of  liveli- 
hood save  that  offered  by  the  anthracite  owners. 


MONOPOLY  203 

The  workers  must  take  the  work  that  the  mine 
owners  give  them  or  else  they  must  go  elsewhere. 
Under  such  circumstances,  the  companies  wield 
the  final  power  of  saying  to  a  man  and  to  his 
family,  "Thou  shalt  eat"  or  "Thou  shalt  not 
eat!" 

The  point  is  well  illustrated  by  a  remark  made 
by  a  witness  before  a  Congressional  Investigating 
Committee  in  1887.  A  railroad  superintendent, 
when  asked  why  he  was  so  sure  the  striking  men 
would  go  to  work  at  the  company's  terms,  replied, 
*  *  Their  necessities. ' '  *  *  Asked  if  he  meant  *  starved 
out,'  he  replied  that  the  company  did  not  propose 
to  keep  the  men  out  till  they  starved,  but  re- 
minded the  Committee  that  'it  (was)  a  necessity 
for  everybody  who  works  that  they  get  work.'  "^ 

With  this  control  of  the  chance  to  work  goes  a 
control  of  the  conditions  of  work  and  life  that 
is  appalling  in  its  completeness.  This  same 
Congressional  Committee  found  that  companies 
were  paying  by  the  "wagon,"  instead  of  the 
ton,  and  sending  in  wagons  that  held  more  than 
the  standard  wagon  was  supposed  to  hold;  they 
found  that  men  were  docked  heavily  if  the  coal 
sent  to  the  surface  was  not  of  a  certain  quality, 
that  the  companies  were  often  slow  in  making 
payments  of  wages.  The  committee  found, 
further,  that  where  the  company  owned  a  large 
block  of  property,  upon  which  a  town  was  built, 
that  the  company  owned  the  houses,  the  stores, 
the  butcher  shops;   that  the  men  were  forced  to 

'"Conciliation  and  Arbitration,"  op.  cii.,  pp.  237-38. 


204  ANTHRACITE 

subscribe  to  the  income  of  the  company  doctor; 
in  short,  that  the  workers  were  not  only  working 
for  the  company,  but  were  Hving  for  the  com- 
pany as  well. 

The  miners  were  thus  subjected  by  their  em- 
ployers to  an  economic  pressure  from  every  side. 
During  later  years  many  of  the  worst  abuses, 
involving  company  houses,  company  stores,  the 
sale  of  powder  at  exorbitant  figures  by  the  com- 
pany, and  the  like,  were  abolished.  The  economic 
pressure  on  the  job  remains,  and  always  will 
remain  while  one  man  owns  the  resources  with 
which  another  man  must  work  in  order  to  Hve. 

Perhaps  the  most  effective  weapon  in  the  hands 
of  the  operators,  for  controlling  the  men  through 
their  jobs,  is  surplus  labor.  Wave  after  wave  of 
immigration  has  immdated  the  anthracite  region.^ 
Speaking  alien  languages  and  accustomed  to 
varying  standards  of  living,  the  alien  groups 
have  pressed  hard  upon  one  another.  Where 
there  are  two  men  competing  for  one  job,  the 
strife  is  apt  to  be  keen  enough  if  the  men  are 
friends  and  neighbors.  When  the  two  are  of 
alien  race,  nation  and  language,  the  struggle 
becomes  brutal. 

In  the  anthracite  fields,  as  elsewhere,  the 
employers  have  relied  upon  the  presence  of 
more  men  than  there  are  jobs  for  much  of  their 
power.  Not  until  the  solidarity  expressed  in  the 
organization    of    the    United    Mine    Workers   of 

1  "The  Slav  Invasion,"  F.  J.  Wame,  1904;  "Anthracite  Coal  Communities," 
Peter  Roberts,  1904. 


MONOPOLY  205 

America  began  to  make  itself  felt,  was  this  poiwer 
seriously  curtailed. 

The  second  economic  effect  of  monopoly  has 
been  commented  upon  at  sufficient  length.  The 
monopolists,  through  their  monopoly  power,  fix 
prices  and  thus  cut  in  upon  the  livelihood  of 
all  those  who  consume  their  product. 

The  monopolist,  in  the  third  place,  enjoys,  in 
his  ownership,  an  automatic  income-yielding 
machine.  The  great  majority  of  people  work 
for  the  income  on  which  they  depend  for  a  living. 
They  exchange  so  many  hours  of  effort  for  so 
many  dollars  of  income.  The  owner  of  a  desir- 
able natural  resource  is  under  no  such  obligation. 
His  ownership  puts  at  his  disposal  a  wholly  suf- 
ficient method  of  securing  an  income. 

Where  there  is  land  enough,  or  where  there 
are  resources  enough  for  all,  no  monopoly  price 
can  be  put  on  any  single  unit  of  the  resource. 
So  long  as  there  are  farms  to  be  had  for  the 
asking,  no  owner  can  get  a  price  for  unimproved 
farm  land.  It  is  only  after  the  supply  is  exhausted 
that  resources  possess  monopoly  power. 

In  the  case  of  anthracite,  the  resource  is  so 
limited  that,  almost  as  soon  as  its  practicability 
was  demonstrated,  all  the  land  known  to  contain 
anthracite  commanded  a  price.  This  land  was 
readily  monopolized,  and  the  entire  community 
was  clamoring  for  the  product. 

Under  these  circumstances,  the  owner  of  a 
piece  of  anthracite  land  can  secure,  in  return  for 
his  bare  ownership,  an  income.     Whether  he  has 


206  ANTHRACITE 

bought  the  land  knowing  it  to  contain  anthra- 
cite or  whether  he  had  bought  it  for  some  other 
purpose,  the  fact  that  it  does  contain  anthracite 
enables  him  to  transfer  his  property  to  a  mining 
company  with  the  stipulation  that  for  each  ton 
mined  within  10  years,  6  cents  shall  be  paid  the 
owner  in  royalty;  for  each  ton  mined  within 
more  than  10  and  less  than  21  years,  7  cents, 
and  so  on.  By  such  means,  the  owner  is  put  in 
possession  of  an  income  that  will  continue  so 
long  as  the  mining  operations  on  his  property 
continue. 

The  owner  is  under  no  obligation.  He  does 
not  work  for  his  royalty  with  either  his  hands  or 
his  head.  He  owns  a  piece  of  property,  and 
because  of  this  ownership  he  receives  a  share  of 
the  proceeds  from  each  ton  of  coal  that  is  mined. 

The  owner  of  a  select  portion  of  nature's  store- 
house owns  for  a  living.  He  secures  his  income 
in  return  for  his  property  titles. 

There  is  a  fourth  economic  result  of  the  mon- 
opoly of  natural  resources.  A  title  to  natural 
resources  often  becomes  more  valuable  as  time 
goes  on.  Resources  are  made  valuable  by  the 
presence  of  permanent  populations,  educated  to 
their  use.  Manhattan  Island  sold  for  $26  because 
the  Indians  had  no  use  for  a  harbor.  If  Man- 
hattan had  belonged  to  a  nation  of  traders  in- 
stead of  a  nation  of  hunters,  it  would  not  have 
sold  for  £1,000,000  sterling. 

Other  things  being  equal,  the  more  permanent, 
progressive  and  intensive    a  civilization  is,   the 


MONOPOLY  207 

more  will  resources  be  worth.  This  is  always 
true  of  the  site  values  in  city  lots,  for  example; 
it  is  true  of  the  power  in  waterfalls  unless  a  new 
source  of  power  is  discovered;  it  is  doubly  true 
of  a  diminishing  resource,  like  a  fuel  or  a  min- 
eral, where  each  ton  mined  is  a  ton  less  in  the 
ground. 

Anthracite  is  a  diminishing  resource,  limited 
in  extent.  As  the  supply  decreases,  the  demand 
remaining  constant,  the  price  rises.  As  the  popu- 
lation grows,  increasing  the  demand,  the  price 
rises.  As  people  build  larger  houses  and  intro- 
duce more  extensive  heating  appliances,  the 
demand  increases  and  the  price  rises. 

The  owner  of  anthracite  land  receives  an  income 
because  he  owns  land  from  which  coal  is  being 
mined.  His  income  is  augmented  by  the  increase 
in  the  demand  for  anthracite  and  by  the  decrease 
in  the  supply. 

The  private  ownership  of  natural  resources 
gives  the  owner  an  immense  economic  power. 
He  has  a  large  control  over  those  who  work  for 
him;  he  places  a  monopoly  price  on  his  product; 
he  enjoys  an  income  in  return  for  his  ownership; 
and  by  virtue  of  his  ownership,  he  receives, 
ftirther,  an  increase  in  values  due  to  the  growth 
and  progress  of  society. 

5.  The  Social  Efects  of  Monopoly 

The  social  effects  of  monopoly  arise  largely 
out  of  its  economic  effects.  Monopoly  creates 
inequality;     makes    for    class    distinctions;    pro- 


208  ANTHRACITE 

duces  exploitation  and  makes  impossible  equality 
of  opportunity.  In  all  of  these  ways  monopoly 
affects  the  organization  and  progress  of  society. 

Monopoly  creates  inequality.  Herbert  Spencer 
a  half  century  ago  pointed  out,  in  Chapter  9 
of  his  "Social  Statics,"  that  if  any  person 
could  own  any  piece  of  property  and  if  there 
was  no  limit  to  the  amount  of  property  that 
might  be  owned  by  any  one  person,  then 
one  individual  might,  by  gaining  possession  of  all 
of  the  property,  let  us  say,  in  Cuba,  exact  a 
tribute  (rent)  from  every  person  in  Cuba.  This 
rent  would  be  paid  for  the  privilege  of  occupying 
land  belonging  to  the  man  who  had  secured 
control  of  the  island. 

Inequality  of  wealth  is  best  created  by  per- 
mitting one  man  to  own  something  that  all  of 
his  fellows  must  have.  The  owners  of  the  anthra- 
cite fields  have  an  almost  perfect  example  of  a 
resource,  limited  in  area,  upon  which  millions 
depend  for  fuel.  The  inevitable  consequence  of 
such  a  situation  is  that  the  owners  of  the  coal 
fields  become  rich,  even  though  those  who  actually 
mine  the  coal  are  making  less  than  a  decent 
living. 

A  reading  of  Gustav  Myers'  suggestive  histo- 
ries of  American  and  Canadian  fortunes,  in  which 
he  traces  minutely  the  origins  of  private  wealth, 
leaves  in  the  mind  one  clear-cut  impression — that 
the  great  fortunes  were  built  for  the  most  part 
upon  the  ownership  of  land,  franchises,  patents 
or  other  special  privileges.     The  ownership  of  a 


MONOPOLY  209 

natural  resource  gives  the  owner  a  power  over 
wealth  that  inevitably  makes  him  richer  than  the 
people  who  put  the  products  of  his  resoturce  on 
the  market. 

The  second  social  effect  of  monopoly  grows 
directly  out  of  this  first  one.  Monopoly  is  the 
largest  single  factor  in  creating  the  basis  for  a 
class  distinction  which  at  the  present  time  takes 
the  form  of  a  distinction  between  owners  and 
workers.  Democracy  is  opposed  to  class  dis- 
tinctions. Inevitably,  then,  it  must  oppose 
monopoly. 

The  owner  of  a  resource,  as  has  been  shown, 
receives  an  income  because  he  is  an  owner.  If 
all  of  the  people  owned  resources  and  received 
income  from  their  ownership,  such  a  form  of 
income  would  make  no  distinguishing  mark 
between  man  and  man.  Resources  are  limited 
in  extent,  however,  and  the  ownership  of  a 
resource  by  one  person  automatically  excludes 
other  persons  from  a  like  opportunity. 

Owners  of  desirable  bits  of  the  earth's  surface, 
without  the  expenditure  of  any  effort  may  demand 
and  receive  rent  of  their  fellows  for  the  use  of 
their  property.  What  must  become  of  those 
fellow  beings  who  use  the  gifts  of  nature  that 
are  owned  by  others? 

The  v/orkers  who  use  the  resources  must  put 
forth  sufficient  exertion  to  provide  for  the  neces- 
sities of  those  dependent  upon  them,  and  in 
addition,  they  must  produce  an  amount  sufficient 
to  pay  rent  to  the  resource  owners. 

14 


210  ANTHRACITE 

Here,  then,  are  two  kinds  of  people.  One  kind 
lives  upon  its  property;  the  other  kind  lives  on 
its  labor.  One  derives  its  income  from  owner- 
ship; the  other  from  work.  One  is  the  recipient 
of  property  income;  the  other  of  service  income. 
This  economic  distinction  forms  the  basis  for  two 
classes  in  society. 

The  distinction  between  owners  and  workers 
is  not  new  by  any  means.  If  history  tells  the 
truth,  the  same  distinction  existed  in  Egypt, 
Carthage,  Greece,  Rome,  Sometimes  the  work- 
ers were  freemen;  more  often  they  were  slaves. 
During  the  middle  ages  the  great  landowners, 
backed  by  the  Church  under  the  Feudal  system, 
exacted  a  return  in  labor  or  in  kind  from  the 
serfs  who  were  attached  to  the  land.  The  situa- 
tion, historically,  is  too  well  known  to  demand 
further  illustration.  Always  those  who  owned 
property  were  able  to  live  upon  the  labor  of 
another  group  which  put  the  property  to  use. 

The  self-same  distinction  will  exist  and  does 
exist  in  any  community  which  allows  private 
individuals  to  secure  possession  of  natural  re- 
sources and  to  deny  to  their  fellow  men  the  right 
to  their  use. 

The  existence  of  class  distinctions  leads  inevit- 
ably to  class  antagonism.  Those  who  are  living 
upon  their  property  at  the  expense  of  the  com- 
munity are  willing  to  sacrifice  anything  except 
the  right  to  collect  rents  from  the  rest  of  the 
world.  Meanwhile,  they  must  use  some  device 
to  cover  up  the  fact  that  the  great  body  of  human 


MONOPOLY  211 

kind  pays  them  a  direct  or  an  indirect  tax  because 
of  their  ownership.  If  no  one  owned  undeveloped 
land,  it  would  make  impossible  gains  that  are 
now  derived  from  land  held,  unimproved,  for  an 
increase  in  value.  The  private  ownership  of  re- 
sources is  one  of  the  most  effective  means  of 
emphasizing  the  distinction  between  those  who 
own  and  those  who  work. 

European  aristocracy  is  built  upon  the  dis- 
tinction between  owners  and  workers.  The 
aristocracy  owned  the  land ;  the  peasantry  worked 
it.  The  aristocracy  lived,  free  from  hand-soiling 
toil;  the  hands  of  the  peasants  were  gnarled  and 
rough. 

No  member  of  the  aristocracy  could  work  at 
common  labor  and  stay  in  his  class.  When 
Count  Tolstoi  went  out  into  the  fields  and  mowed 
with  the  peasants,  all  Europe  treated  the  event 
as  unique.  No  member  of  the  aristocracy  ever 
worked  with  his  hands.  The  man  who  worked 
with  his  hands  was  no  gentleman.  Hand  work 
branded  the  hand  worker  as  of  a  lower  social 
grade  than  was  the  person  who  never  did  hand 
work. 

The  same  feeling  appears,  even  more  strongly 
marked,  in  communities  where  slavery  exists. 
The  slaves  do  the  hard  work.  The  master  class 
holds  itself  above  labor. 

The  owning  class  does  not  work.  How  then 
can  it  live? 

The  answer  to  that  question  leads  on  to  the 
next  point  in  the  argument.     The  ownership,  by 


212  ANTHRACITE 

one  group  in  the  community,  of  the  natural 
resources  enables  the  owning  group  to  live  at 
the  expense  of  the  working  group. 

The  oft-reiterated  saying,  "He  who  will  not 
work,  neither  shall  he  eat,"  is  revised  by  the 
economic  world,  until  it  reads,  "He  who  owns 
the  land  may  eat  and  do  no  work."  The  own- 
ers of  natural  resources  are  able,  because  of  this 
ownership,  to  live  without  work. 

The  way  in  which  the  owners  of  resources  may 
make  others  pay  them  rent  is  clear  enough.  Men 
and  women  must  live  upon  the  products  of  the 
earth.  If  all  of  the  earth  is  preempted,  those 
who  do  not  own  must  make  terms  with  those 
who  do.  That  is  true,  but  is  it  also  true  that  the 
ownership  of  natural  resources  enables  the  owner 
to  live  without  making  any  contribution  to  the 
community?  Does  not  his  very  ownership  con- 
stitute a  contribution? 

Let  us  see. 

An  English  earl  inherits  an  Irish  estate.  He 
has  never  visited  the  estate  nor  taken  any  inter- 
est in  it.  Each  year,  however,  his  steward  col- 
lects and  sends  to  him  £1,000  in  rentals.  What 
contribution  does  the  earl  make  to  his  Irish 
tenants?  Clearly  he  makes  no  contribution. 
He  did  not  make  the  land;  he  takes  no  interest 
in  it;  he  never  improves  it.  The  land  might 
be  owned  by  anyone  or  no  one;  by  an  idiot  child 
or  a  steel  manufacturing  corporation.  In  any 
case,  the  owner  would  collect  the  rents. 

The  English  earl  has  never  worked  in  England. 


MONOPOLY  213 

He  wears  hats,  coats  and  shoes  that  are  paid 
for  by  the  labor  of  his  Irish  tenants.  The  Eng- 
lish artisans  exchange  their  labor  with  the  labor 
of  the  Irish  peasants,  and  the  benefits  are  derived 
by  the  man  who  holds  the  land. 

The  holder  of  the  natural  resource,  because  he 
is  a  natural  resource  owner,  lives  upon  the  work 
of  those  who  must  use  his  resources  in  order  to 
gain  a  Hving  for  themselves. 

Exploitation  is  the  term  ordinarily  used  to 
characterize  a  condition  of  society  under  which 
one  group  of  people  lives  upon  the  labor  of  an- 
other group  without  itself  giving  any  return 
for  the  living  it  receives.  Natural  resource 
monopoly  leads  inevitably  to  exploitation.  The 
owners  hold  in  their  possession  the  means  whereby 
others  must  live.  These  others  cannot  choose, 
but  must  divide  with  the  owners  the  product 
of  their  toil. 

The  monopoly  of  natural  resources  in  the 
United  States  has  greatly  accelerated  exploita- 
tion. Huge  fortunes  have  been  built  up  on 
natural  resource  ownership.  Thousands  of  fam- 
ilies, old  people  and  yoiuig  people  alike,  are 
engaged  in  the  pursuit  of  "living  on  their  in- 
come," which  means  living  on  the  power  of 
ownership. 

"Living  on  one's  income"  has  become  a  com- 
mon pastime  in  the  United  States.  The  aris- 
tocracy of  Europe  has  been  similarly  engaged  for 
centuries.  Any  group  of  people  who  can  monopo- 
lize natural  resources  can  share  in  the  products 


214  ANTHRACITE 

of  the  labor  of  others,  and  thus  "live  on  their 
income." 

6.  Monopoly  Denies  Opportunity 

Among  all  of  the  serious  results  of  natural 
resource  monopoly,  perhaps  the  most  serious  is 
the  fact  that  it  denies  opportunity. 

Opportunity  is  the  corner-stone  of  democracy. 
Every  child  born  into  the  world  is  to  have  a 
chance  to  develop  his  talents.  This  freedom  of 
the  individual  to  express  himself  gives  all  a  chance 
to  show  their  qualities.  Thus  the  ablest  will  be 
called  to  leadership  in  science  and  art,  industry 
and  statesmanship. 

The  early  colonists  had  something  of  this  ideal 
when  they  established  private  property  in  natural 
resources.  The  feudal  system  of  entailed  owner- 
ship had  denied  to  most  men  the  opportunity  to 
show  their  qualities.  Only  the  well-born,  under 
that  system,  were  given  a  chance.  All  this  must 
be  changed.  All  were  bom  free  and  with  equal 
rights  to  a  chance  in  life.  The  free  ownership  of 
a  bit  of  land  would  insure  such  a  result. 

The  scheme  was  tried,  and  the  time  came 
when  all  of  the  choice  pieces  of  the  earth  were 
taken  and  held  in  fee  simple  "to  him  and  to  his 
heirs  forever."  The  ownership  of  the  best  re- 
sources was  vested  in  great  corporations  and  the 
twentieth  century  found  all  of  the  valuable 
resources  in  private  hands.  The  child  born  today 
sees  the  doors  to  opportunity  held  shut  by  the  very 
device  that  was  relied  upon  to  block  them  open. 


MONOPOLY  215 

A  few  own  the  resources.  The  rest,  under  the 
driving  necessity  to  live,  must  go  to  these  own- 
ers and  ask  for  a  chance  to  work.  The  great 
body  of  men  must  accept  as  masters  those  who 
own  the  means  of  Hvelihood. 

The  anthracite  fields  are  an  excellent  illustra- 
tion of  the  social  effects  of  monopoly.  The 
anthracite  fields  are  not  for  sale.  They  are  all 
held,  and  held  tight,  by  great  corporate  inter- 
ests which  do  not  propose  to  part  with  them. 
The  owners  of  the  stocks  and  bonds  of  these 
corporations  do  not  even  live  in  the  hard  coal 
regions.  There  are  people  today  drawing  income 
from  anthracite  stocks  and  bonds  who  have  never 
seen  an  anthracite  mine.  The  anthracite  fields 
are  owned  by  a  group  of  absentee  landlords  who 
would  not  work  in  the  mines,  who  would  not 
dream  of  recognizing  the  miners  socially  or  having 
any  personal  dealings  with  them,  and  yet  who 
do  not  hesitate  for  a  moment  to  live  upon  the 
proceeds  of  the  labor  of  the  anthracite  mine 
workers. 

The  children  born  to  anthracite  miners  have 
this  opportunity.  They  may  secure  a  common 
school  education,  and  then  they  must  go  to  work 
in  the  mines  and  labor  for  those  who  own  the 
resource.  Yes,  a  few  of  them  may  save  their 
money,  buy  stock  in  the  mining  companies  and 
live  upon  the  proceeds  of  the  labor  of  other 
miners,  but  is  that  an  answer  to  the  prob- 
lem? Does  it  not  emphasize  instead  of  solving 
it? 


216  ANTHRACITE 

7.  The  Political  Effects  of  Monopoly 

Beside  the  economic  and  social  effects  of 
monopoly,  there  are  certain  political  effects, 
equally  well  defined  and  equally  undesirable  in 
their  out-croppings.  Theoretically  the  citizens 
of  a  democracy  are  the  government.  Practically, 
the  monopoly  of  natural  resources  vests  a  sec- 
tion of  governmental  power  in  the  natural  resource 
monopolists. 

The  most  vital  governmental  power  is  the 
taxing  power.  The  power  to  tax  includes  the 
power  to  destroy.  The  taxing  authority  holds 
life  and  death  power  over  his  subjects. 

What  is  the  taxing  power? 

Originally  it  was  the  right  exercised  by  people 
in  authority,  to  levy  on  their  subjects.  These 
levies  included  war  duty,  labor  in  the  construc- 
tion of  some  public  work,  a  percentage  of  the 
produce  of  the  land,  or,  in  later  times,  money. 
In  the  earlier  stages  of  civilization  a  ruler  would 
"farm  out"  the  taxing  power  over  a  province. 
The  governor  of  the  province  would  be  required 
to  pay  a  certain  levy.  All  of  the  taxes  that  he 
collected  above  this  sum  were  his  own.  Many 
of  the  wealthy  men  of  Rome  made  their  money 
as  governors  of  tribute  territory.  The  idea  under- 
lying this  taxation  was  "get  all  you  can."  Con- 
sequently, the  taxing  authority  took  from  the 
subjects  everything  except  a  bare  living. 

The  same  concept  of  taxation  existed  in  West- 
ern Europe  for  centuries.  In  France,  under 
Louis   XIV,    the   entire   nation   was   drained   to 


MONOPOLY  217 

build  Versailles,  equip  it  and  beautify  its  sur- 
roundings. 

Earlier  ages  knew  no  such  thing  as  a  regular 
tax  rate.  The  rule  "get  all  you  can"  meant 
that  the  tax  gatherer  extorted  the  last  farthing. 
Rousseau  tells  of  a  chance  visit  that  he  paid  to 
a  peasant  hut.  The  man  of  the  house,  hospitable 
as  his  lot  would  permit,  put  on  the  table  a  piece 
of  black  bread  and  a  bottle  of  sour  wine.  They 
talked  for  a  long  time  over  this  meal,  and  in  the 
course  of  the  conversation  the  peasant  assured 
himself  that  Rousseau  was  neither  a  tax  gatherer 
nor  a  tax  gatherer's  spy.  Thereupon  he  opened 
a  trap-door  in  the  floor  and  produced  some  white 
bread  and  good  wine,  with  the  explanation  that, 
if  the  tax  collector  knew  that  such  things  existed 
in  the  house,  his  taxes  would  be  increased.  The 
peasant  was  taxed  in  proportion  to  his  ability 
to  pay,  and  taxed  all  that  he  had. 

This  primitive  form  of  taxation  came  to  be 
regarded  as  tyranny.  Why  should  the  French 
peasant  be  reduced  to  thin  onion  soup  and  herbs, 
through  the  payxnent  of  his  surplus  to  a  king 
and  a  court  that  were  living  in  extravagant  luxury  ? 
The  peasant  needed  the  surplus  for  his  very  neces- 
sities. The  king  needed  it  not  at  all;  yet  the 
king  (or  the  prince  or  duke)  got  the  surplus, 
because  he  owned  the  land. 

Many  of  the  early  American  colonists  fled 
from  just  such  tyranny.  They  feared  taxes 
because  taxes  meant  want  for  the  tenant  and  lux- 
ury for  the  proprietor.     Hence,  in  this  new  land, 


218  ANTHRACITE 

following  the  example  already  set  in  the  more 
advanced  countries  of  Europe,  taxes  were  levied 
only  by  the  representatives  of  the  people,  and  the 
proceeds  of  taxation  were  used  only  for  the  public 
good.  Men  still  paid  taxes,  to  be  sure,  but  the 
proceeds  of  taxation  went  into  roads,  schools, 
public  buildings  and  other  public  works,  from 
which  all  of  the  people  could  derive  benefit. 

Taxation  was  no  longer  tyranny,  but  a  means 
of  promoting  public  welfare. 

Then  free  public  land  disappeared  and  the 
monopoly  power  of  those  who  held  the  resources 
grew  apace.  The  power  to  tax  appeared  in  a 
new  form — the  levying  of  "all  that  the  traffic 
will  bear." 

The  wheels  of  time  seemed  to  move  backward. 
The  struggles  of  centuries  were  set  at  naught. 
A  newly  created  master  class  was  levying  on  its 
subjects  a  tax,  not  fixed,  not  destined  to  minister 
to  the  public  welfare,  but  "all  that  the  traffic 
will  bear." 

This  taxing  power  of  private  monopoly,  or  spe- 
cial privilege,  as  it  is  sometimes  called,  takes  on 
a  new  form.  The  old-time  tax  collector  enforced 
his  decrees  against  the  producer.  He  took  from 
the  peasant  who  used  the  land  a  part  of  the  wheat 
and  the  grapes  which  the  land  produced.  The 
modem  monopolist  enforces  his  decrees  against 
the  consumer  as  well  as  against  the  producer. 

The  worker  must  use  his  resources  and  pay  to 
the  owner  a  part  of  the  product  in  rent  or  in 
surplus  value.     The  monopolist  adds  to  the  legit- 


MONOPOLY  219 

imate  costs  of  production  an  extra  charge — a 
monopoly  profit — equal  to  what  the  traffic  will 
bear,  and  insists  that  the  consumers  pay  a  monop- 
oly price  for  the  product. 

The  owners  of  the  anthracite  coal  fields  are  able 
to  levy  this  monopoly  tax  on  the  people  of  the 
United  States.  They  own  an  important  resource; 
the  public  needs  the  products  of  this  resource; 
the  monopolists  charge  for  their  products  the  cost 
of  production,  a  fair  profit,  plus  a  tax  based  on 
monopoly  power. 

The  owners  of  agricultural  land,  in  feudal  times, 
levied  "all  that  the  traffic  will  bear"  on  their 
tenants.  The  owners  of  natural  resources  in  the 
United  States  today  levy  "all  that  the  traffic  will 
bear"  on  those  who  consimie  the  products  of 
their  resources.  Then,  as  now,  this  tax  went,  not 
to  increase  public  welfare,  but  to  increase  private 
wealth. 

Politically,  no  phase  of  monopoly  is  so  important 
as  its  taxing  power.  The  powers  of  government 
are  divided  between  the  people  (or  their  represen- 
tatives) and  the  owners  of  the  natural  resources. 
Although  the  facts  are  not  available,  there  is 
every  indication  that  the  tax  paid  each  year  by 
the  American  people  to  the  owners  of  special 
privilege  is  greater  than  the  entire  amount  paid 
by  them  for  the  maintenance  of  the  local,  state 
and  national  governments. 

The  second  political  effect  of  monopoly  or  special 
privilege  carries  the  argimient  to  the  funda- 
mental  character  of  the  American  government. 


220  ANTHRACITE 

Democracy  is  based  on  the  assumption  that  all 
men  have  equal  rights.  Special  privilege  is  based 
on  the  assumption  that  some  men  have  exclusive 
rights.     The  two  ideas  are  diametrically  opposed. 

When  special  privilege  comes  in  at  the  door, 
democracy  flies  out  at  the  window.  The  monopoly 
of  the  anthracite  coal  fields  by  a  few,  automatically 
excludes  all  others  from  ownership  at  the  same  time 
that  it  puts  in  the  hands  of  the  few  the  power  to 
tax  the  many. 

Special  privilege  annihilates  democracy.  The 
present  system  of  privately  owned  natural  re- 
sources is  in  its  very  essence  a  form  of  special 
privilege. 

Privilege  and  democracy  are  opposed,  each  to 
the  other.  If  privilege  wins,  democracy  is  lost. 
If  democracy  wins,  privilege  is  destroyed.  The 
contest  between  the  two  was  never  more  bitter 
than  it  is  today. 

The  American  government  was  founded  on  a 
basis  of  democracy.  The  growing  monopoly 
power  of  resource  ownership  undermined  this 
democracy,  until  in  the  seventies  and  eighties, 
with  the  rise  of  great  aggregations  of  capital 
known  as  "trusts,"  the  very  existence  of  democ- 
racy was  threatened.  The  last  forty  years  have 
witnessed  a  growing  public  consciousness  of  the 
danger  and  a  myriad  of  efforts  to  curb  special 
privilege.  Anti-trust  and  railroad  legislation 
leads  the  list  of  the  legislative  remedies  for  monop- 
oly control  that  have  been  adopted  by  the  Amer- 
ican people. 


MONOPOLY  221 

8.  Anthracite  and  the  Government 

The  anthracite  fields  have  presented  a  pecu- 
liarly significant  phase  of  the  conflict  between 
privilege  and  democracy,  because  there  the 
natural  resource  monopoly  and  the  railroads 
have,  for  many  years,  worked  in  the  very  closest 
harmony,  thus  combining  two  of  the  most  power- 
ful forms  of  privilege. 

Suffern,  in  his  analysis  of  the  relations  between 
the  anthracite  owners  and  the  people,  writes: 
"Large  combinations  of  capital  not  only  assumed 
all  the  arrogance  of  individual  ownership,  but, 
because  they  were  conducting  large  enterprises 
which  could  not  be  carried  on  without  immense 
capital,  they  believed  themselves  entitled  to 
greater  consideration  than  the  small  owners.  The 
suspicion  with  which  the  monopolistic  tendencies 
of  large  corporations  were  regarded  led  their 
representatives  before  the  legislature  to  empha- 
size the  favors  which  large  organizations  conferred 
upon  the  commonwealth  and  to  overawe  the  simple 
legislative  mind  with  their  mighty  projects."^  .  .  . 
"Since  the  state  laws  were  ineffective,  the  con- 
certed action  of  the  union  was  necessary  to  bring 
about  the  abolition  of  the  abuses. "^ 

Continuing,  Suffern  shows  the  ways  in  which  the 
owners  of  the  anthracite  coal  properties  shaped 
the  government  to  serve  their  own  purposes.  The 
Pennsylvania  State  Constitution  of  1874,   "pro- 


1  "Conciliation  and  Arbitration,"  op.  cit.,  p.  215. 
« Ibid.,  p.  244. 


222  ANTHRACITE 

hibited  railroads  from  engaging  in  mining  and 
manufacturing."  The  party  in  power  promptly- 
passed  a  series  of  acts  which  permitted  railroads 
to  hold  any  coal  lands  acquired  previous  to  1874 
and  by  an  appeal  to  the  Court  of  Common  Pleas 
permitted  the  validation  of  charters  rendered 
defective  by  the  new  constitution.  As  a  result  of 
these  laws,  the  railroad  interests  continued  the 
mining  of  coal  as  heretofore. 

Judicial  interpretation  was  effective  in  giving 
stiU  wider  limits  to  corporate  activity  in  the  coal 
fields. 

An  investigation  by  the  Interstate  Commerce 
Commission  in  1907  showed  that  "the  ownership 
of  coal  properties  and  stock  in  coal  companies  by 
officers  of  the  Pennsylvania  Railroad  resulted  in 
grave  abuses  in  discrimination  and  distribution 
of  cars."^  The  legislature  passed  a  law  forbidding 
officers  or  employees  of  railroads  to  have  an 
interest  in  coal  properties  along  the  fine  of  their 
own  railroad.  The  same  legislature  created  a 
railroad  commission  and  passed  a  law  forbidding 
common  carriers  to  ' '  engage  in  any  other  business 
than  that  of  common  carriers,  or  hold  or  acquire 
lands,  freehold  or  leasehold  directly  or  indirectly, 
except  such  as  shall  be  necessary  for  carrying  on 
its  business. "2  "Evidently  these  simple  pro- 
visions had  'disquieted'  somebody,  for  in  1909 
an  act  was  passed  '  to  quiet  the  title  of  real  estate 
and  to  enable  citizens  of  the  United  States,  and 

1  "Conciliation  and  Arbitration,"  op.  cii.,  p.  218. 
'^Ibid.,  p.  219. 


MONOPOLY  223 

corporations  chartered  under  the  laws  of  this 
Commonwealth,  and  authorized  to  hold  real 
estate  therein,  to  hold  and  convey  title  to  real 
estate,  which  had  been  formerly  held  by  corpora- 
tions not  authorized  by  law  to  hold  real  estate 

in    Pennsylvania Somebody  must  have 

required  considerable  'quieting,'  for  this  identical 
act,  which  had  been  approved  by  Governor 
Stuart,  April  23,  1909,  was  again  enacted  and 
approved  by  Governor  Tener,  March  7,  1911,  and 
re-enacted  and  approved  by  the  same  governor, 
Jime  15,  1911.  Evidently  it  was  thought  a 
necessary  precaution  to  pass  the  act  every  time 
transfers  of  property  were  made. 

"We  have  given  this  brief  resume  of  the  legal 
backgroiuid  simply  to  demonstrate  the  practically 
imlimited  sway  held  by  capital  in  the  anthracite 
region  and  how  little  consideration  of  the  law  was 
necessary  before  consimimating  the  deals  which 
took  place  between  1874  and  1911. 

"We  have  referred  to  the  extent  of  the  owner- 
ship of  lands  in  1872  and  1873.  The  Reading 
Railroad  made  good  use  of  the  time,  so  that  when 
the  constitution  went  into  effect  in  1874  it  was  in 
possession  of  100,000  acres.  As  we  have  seen, 
from  a  legal  standpoint  there  was  not  much  to 
hinder  further  purchases,  and  by  1887  the  Read- 
ing owned  165,189  acres  of  coal  and  agricultural 
lands  which  had  a  bonded  indebtedness  of  $160,- 
000,000.  ...  By  1896  it  was  estimated  that 
96.29  per  cent  of  the  coal  lands  was  controlled 
directly  or  indirectly  by  the  railroads,  and  90  per 


224  ANTHRACITE 

cent  was  controlled  by  five  out  of  the  eleven  roads 
reaching  the  anthracite  fields.  ...  As  we  have 
seen,  laws  were  passed  in  1897  and  1903  to  legalize 
transfers  that  had  been  made  since  1896."^ 

The  extensive  purchase  of  coal  lands  and  the 
extensive  mining  operations  carried  on  by  rail- 
road interests  are  but  examples  of  the  way  in  which 
the  owners  of  the  anthracite  fields  showed  them- 
selves superior  to  the  law. 

The  monopoly  of  natural  resources  places  in 
the  hands  of  the  monopolists  such  power  that 
they  are  able  to  levy  a  tax  on  all  consumers  of 
their  product.  So  great  is  this  special  privilege, 
given  to  the  few  and  withheld;  from  the  many, 
that  in  past  years  the  natural  resource  owners 
have  been  able  to  direct  some  of  the  affairs  of 
government. 

9.   The  Enemy  Within  the  Gates 

However  attractive  the  plan  for  the  private 
ownership  of  natural  resources  may  have  looked 
to  the  early  settlers  of  America ;  whatever  escape 
it  may  have  offered  from  the  grim  tyranny  of 
European  landlordism,  the  project  apparently  has 
failed.  It  was  designed  to  promote  ambition, 
initiative  and  thrift;  to  create  opportunity  and 
to  increase  the  possibilities  for  life,  liberty  and 
the  pursuit  of  happiness.  In  practice,  it  has  led 
to  a  new  form  of  monopoly — the  monopoly  of 
industrial  opportunity. 

The  private  ownership  of  natural  resources  has 

>  "Conciliation  and  Arbitration,"  op.  cit.,  pp.  119-21. 


MONOPOLY  225 

gone  farther.  By  giving  to  individuals  the  ex- 
clusive right  over  the  choice  bits  of  the  earth's 
surface,  it  has  placed  in  the  hands  of  these  indi- 
viduals an  immense  power — economic,  social  and 
political.  Economically,  it  gives  the  monopolist 
the  power  over  the  opportunities  for  the  employ- 
ment of  his  fellows,  enables  him  to  fix  prices,  gives 
him  an  income  for  which  he  need  do  no  work  and 
permits  him  to  take  possession  of  social  values. 
Socially,  natural  resource  monopoly  leads  to 
inequality,  makes  for  classes  and  for  class  dis- 
tinctions, makes  possible  exploitation  and  makes 
impossible  equality  of  opportunity.  Politically, 
natural  resource  monopoly  gives  the  monopolist 
the  power  to  tax  the  community  and  enables  him 
to  set  up  an  authority  which  frequently  dominates 
and  supplants  the  authority  of  political  govern- 
ment. The  private  ownership  of  natural  resources 
has  centered  in  the  hands  of  the  resource  owners 
an  immense  authority  over  the  destinies  of 
mankind. 

The  early  arguments  in  favor  of  natural  resource 
ownership  by  individuals  were  based  on  the 
asstimption  that  the  individuals  who  owned 
would  be  energized  and  stimulated.  The  private 
ownership  would  therefore  open  a  larger  field  of 
opportunity  for  mankind. 

The  chief  resources  are  today  owned  by  corpora- 
tions which  have  neither  energy,  thrift,  ambition 
nor  any  other  human  virtues.  Instead,  they  are 
legal  entities,  with  perpetual  life,  limited  liability 
and  an  immense  range  of  authority.     The  owner- 


226  ANTHRACITE 

ship  of  most  of  the  important  resources  has  passed 
from  the  individual  to  the  corporation,  and  with 
that  transfer  there  has  gone  practically  every  one 
of  the  original  arguments  in  favor  of  the  private 
ownership  of  resources.  The  founders  of  Amer- 
ican democracy  presupposed  an  individual  owner- 
ship. The  revolution  in  the  form  of  industrial 
control  has  made  the  ownership  largely  corporate. 

Although  the  chief  reasons  in  favor  of  the  pri- 
vate ownership  of  natural  resources  have  been 
swept  out  of  existence  by  the  inauguration  of 
corporate  ownership,  private  ownership  remains — 
a  special  privilege  under  the  control  of  the  few, 
and  carrying  with  it  a  monopoly  power  of  the 
most  sweeping  character.  Exercising  its  authority 
as  a  means  of  augmenting  profits,  strangely  blind 
to  the  public  weal,  this  monopoly  of  the  means  of 
life  threatens  to  wreck  this  civilization  as  it  has 
wrecked  its  predecessors. 

Natural  resource  monopoly  entered  our  civili- 
zation as  a  friend  and  benefactor.  Time  and 
experience  have  shown  that  a  wolf  was  hiding 
under  the  sheep's  clothing. 

The  lesson  of  natural  resource  monopoly — as  it 
appears  in  history,  as  it  exists  in  the  anthracite 
fields,  as  it  may  be  found  in  other  American 
resources — is  unmistakable.  The  benefits  go  to 
the  privileged  few,  while  the  great  majority  of 
men  pay  the  biU. 


CHAPTER  8 

THE   FUTURE   OF   ANTHRACITE 

1.  The  Conflicting  Anthracite  Interests 

The  figiires  that  have  been  cited  show  con- 
clusively enough  that  there  is,  in  the  anthracite 
field,  a  line-up  of  conflicting  interests.  On  the 
one  side  are  the  operators;  on  the  other  side  are 
the  workers  and  the  consumers.  The  operators 
aim  at  large  profits;  the  workers  demand  high 
wages;  the  consumers  seek  low  prices.  High 
wages  and  low  prices  threaten  profits,  hence  the 
advocates  of  high  wages  and  low  prices  are  neces- 
sarily brought  into  conflict  with  those  who  aim 
at  large  profits. 

There  is  nothing  imcommon  about  such  a  situa- 
tion. Everywhere  one  meets  with  conflicting 
interests ;  everywhere  there  are  gainers  and  losers. 
Opposed  to  each  group  in  the  community  is  some 
other  group.  The  organization  of  society  arises 
out  of  this  diversity  of  interests.  The  important 
point  is  not  that  some  gain  and  others  lose,  but 
who  gains  and  who  loses. 

The  answer  which  American  philosophy  makes 
to  such  a  conflict  is  unmistakably  definite.  The 
net  gain  must  be  the  gain  made  by  the  majority. 
The  principles  laid  down  as  the  foundation  of 
American  political  and  social  life  allow  of  no  other 
alternative. 

(227) 


228  ANTHRACITE 

The  American  governmental  idea  was  born  at 
the  end  of  a  political  and  social  system  that  had 
as  its  object  the  gain  of  the  favored  few,  A  special 
class  (the  aristocracy  of  Europe),  selected  auto- 
matically by  the  accident  of  birth,  through  their 
control  of  the  natural  resources  and  of  the  offices 
of  trust,  enjoyed  the  first  fruits  of  the  land. 
Meanwhile  the  great  mass  of  mankind  worked 
on  the  land  owned  by  the  few,  did  their  bidding 
in  peace  and  in  war,  and  received  for  these  services 
the  barest  subsistence.  The  government  was 
managed  in  the  interests  of  a  small  number  of 
hereditarily  privileged  persons.  They  enjoyed  its 
benefits  while  the  remainder  of  the  human  race 
carried  its  burdens. 

America  was  the  embodiment  of  a  protest 
against  a  social  system  maintained  in  the  interests 
of  a  special  class.  The  American  government 
was  to  be  a  government  by  the  people,  in  their 
o'^'-n  behalf. 

The  laws  of  life  dictate  that  in  every  conflict 
some  must  lose  and  some  gain.  Feudalism 
boasted  a  few  gainers  and  a  great  many  losers. 
The  early  colonists,  as  well  as  the  founders  of  the 
State  and  Federal  governments,  sought  a  social 
system  under  which  there  should  be  many  gainers 
and  only  a  few  losers. 

Was  this  too  much  to  hope?  Was  it  tinreason- 
able  to  expect  that  a  system  of  society  could  be 
devised  under  which  the  majority  and  not  the 
minority  were  to  be  the  net  gainers  in  life?  If 
such  a  proposition  is  hopeless,  the  whole  basic 


THEFUTURE  229 

assumption  of  democracy  is  false.  So  long  as  that 
belief  in  the  importance  of  majority  welfare  per- 
sists— so  long  as  the  democratic  ideal  holds  sway — 
any  question  of  public  welfare  must  be  decided 
with  the  welfare  of  the  majority  directly  in  view. 

The  problem  of  natural  resource  control  is  one 
of  those  large  social  questions  that  must  be  tested 
in  terms  of  majority  welfare.  Those  who  control 
the  resources  of  the  country  hold  under  their  sway 
the  nation's  "tree  of  life."  Let  one  part  of  the 
people  secure  full  control  of  these  resources  and 
their  "yea"  or  "nay"  is  the  last  word  that  can 
be  said. 

The  problem  of  natural  resources  differs  not  a 
whit  from  any  other  question  of  social  welfare 
save  that  it  is  more  vital  than  most  questions. 
The  same  rule  of  social  procedure  that  held  good 
in  1789  holds  good  in  1916.  Those  things  that  can 
be  privately  managed,  with  a  maximum  of  advan- 
tage to  the  community,  must  be  left  under  private 
control.  Those  things,  on  the  other  hand,  that 
under  private  control  might  become  a  menace  to 
community  welfare  must  be  publicly  managed  in 
the  interests  of  all.  The  Constitutional  Con- 
vention proceeded  on  this  assumption,  leaving  all 
mercantile  and  manufacturing  business  to  private 
initiative,  while  the  control  over  waterways,  post 
roads,  the  issue  of  money,  and  other  like  activities 
that  experience  had  shown  to  be  necessary  to 
public  welfare,  was  vested  in  the  government. 

During  the  past  century  and  a  half  the  Ameri- 
can people  have  had  a  very   definite   experience 


230  ANTHRACITE 

with  the  private  ownership  of  natural  resources. 
This  experience  is  typified  by  the  situation  in  the 
anthracite  fields.  What  action  shall  they  take  in 
this  and  other  cases  of  like  import  ? 

2.  The  Coal  Owners  Would  Stand  Pat 

One  group  of  interests  in  the  anthracite  fields 
is  entirely  willing  to  let  things  remain  as  they  are. 
The  coal  owners  are  satisfied.  They  can  well 
afford  to  be  contented  with  the  situation,  since 
the  net  benefits  from  the  present  system  of  land 
control  accrue  almost  wholly  to  them. 

As  things  stand  at  present,  the  owners  of  the 
anthracite  properties  have  the  following  assets: 

1.  A  valuable  natural  resource  which  is 

readily  convertible  into  a  highly 
marketable  product. 

2.  A  large  and  an  assured  income  that  is 

based  on  the  continued  use  of  this 
resource. 

3.  A  property  that,  up  to  a  certain  point, 

will  increase  in  value  as  years  go  by, 
and  that,  owing  to  the  accepted 
methods  of  bookkeeping,  will  leave, 
after  its  exhaustion,  a  depreciation 
or  amortization  fund  sufficient  to 
return  to  the  owners  an  amount 
equal  to  the  high-tide  value  of  the 
property. 

4.  So  long  as  the  present  system  of  land 

ownership  continues,   a  source  of 


THEFUTURE  231 

increasing  monopoly  power,  based 
on  a  steadily  growing  demand 
and  a  decreasing  supply  of  an- 
thracite. 

If  there  can  be  any  assurance  in  investment, 
this  anthracite  investment  is  sure.  'I'he  owners 
know  this.  They,  better  than  anyone  else, 
appreciate  the  supreme  importance,  to  them,  of 
their  present  position.  Therefore  they  stand  for 
the  continuance  of  a  system  that  produces  huge 
profits  for  the  owners  and  subsistence  wages  for  a 
great  body  of  the  workers,  while  it  lays  the  full 
burden  upon  the  consumer  in  the  form  of  increased 
prices. 

S.  The  Future  for  the  Workers 

The  owners  are  satisfied,  but  they  are,  numer- 
ically, only  one  small  factor  in  the  problem. 
There  are  175,000  anthracite  workers.  What  is 
their  position  ? 

The  workers  .are  not  satisfied  with  things  as 
they  are.  On  the  contrary,  they  have,  during 
recent  years,  expressed  themselves  continually 
and  forcefully  in  long-continued,  bitter  labor  wars. 
The  workers  want  a  change  in  the  conditions  pre- 
vailing in  the  anthracite  fields,  and  they  want  it 
so  badly  that  they  have  shown  their  willingness, 
during  one  suspension  after  another,  to  suffer 
privation  and  to  see  their  families  suffer  privation 
in  order  to  bring  about  the  changes  in  which  they 
believe. 


232  ANTHRACITE 

The  anthracite  workers  may  demand  any  one 
of  five  important  changes  in  the  coal  fields : 

1.  They  may  demand  a  minimum  wage 

based  on  the  cost  of  decent,  health- 
ful living. 

2.  They  may  demand,  over  and  above 

this  "living  wage,"  a  return  for  the 
extra  hazards  of  the  work  which 
they  are  called  upon  to  do. 

3.  They  may  insist  that  these  wages  shall 

increase  in  proportion  to  the  in- 
creasing cost  of  living. 

4.  They  may   demand  a  share  in   the 

phenomenal  prosperity  of  the  an- 
thracite business. 

5.  They  may  demand  the  "full  product" 

of  their  labor. 

The  first  three  demands  may  be  realized  through 
the  operations  of  a  powerful  trade  union.  The 
miners  have  a  number  of  excellent  examples  before 
them.  The  railway  brotherhoods,  after  years  of 
unceasing  activity,  have  at  last  reached  a  point 
where  they  command  public  confidence  and  exer- 
cise an  authority  so  strong  that  they  have  secured 
a  wage  that  represents  decency,  risk  and,  in  the 
last  year  or  two,  the  increase  in  the  cost  of  living. 
Indeed,  these  unions  have  grown  so  powerful  that 
in  the  last  request  for  an  increase  of  wages  on  the 
western  lines,  the  men  were  willing  to  argue  that 
they  were  entitled  to  some  share  in  the  prosperity 
of  the  railroads.     The  building  trades,  the  printers 


THE     FUTURE  233 

and  a  few  other  trade  groups  have  been  able  to 
secure  decency  wages  through  their  trades  union. 
The  union  is  therefore  an  agency  that  the  mine 
workers  may  rely  upon  to  give  them  wage  in- 
creases up  to  a  certain  point. 

The  unions  have  generally  failed  to  get  a  share 
in  the  prosperity  of  the  industries  for  which  they 
worked,  unless  full  time  work  can  be  regarded  as 
a  share  in  prosperity.  This  failure  has  been  due 
mainly  to  the  facility  with  which  the  employers 
have  been  able  to  shift  the  burden  of  increased 
wages  to  the  consumer. 

The  manner  in  which  the  increase  in  wages  to 
the  anthracite  workers  has  been  used  as  an  excuse 
for  adding  even  greater  burdens  to  the  load  carried 
by  the  anthracite  consumer,  is  found,  in  dupli- 
cate, wherever  the  employers  have  a  sufficiently 
great  monopoly  power.  The  result  is  that  the 
apparent  gains  of  a  few  workers  have  been  more 
than  neutralized  by  the  general  increase  in  the 
prices  paid  by  all  workers. 

Unions  have  bettered  working  conditions,  raised 
wages,  decreased  hours  and  given  to  the  workers 
a  feeling  of  solidarity.  From  the  very  nature  of 
the  case,  they  cannot  be  an  important  factor  in 
securing  a  fairer  distribution  of  income,  so  long 
as  the  employers  possess  a  monopoly  power 
sufficient  to  enable  them  to  use  a  wage  increase 
as  an  excuse  for  adding  that  and  more  to  the  price 
of  the  product. 

The  demand  for  the  "full  product"  of  labor, 
voiced  so  persistently  of  late  years,  presupposes 


234  ANTHRACITE 

a  complete  overturn  of  the  present  economic  organ- 
ization of  society.  So  long  as  the  owner  of  a 
piece  of  anthracite  land,  simply  because  he  is  the 
owner,  is  permitted  to  take  a  share  of  the  product 
of  the  mines,  there  can  never  be  a  "full  product" 
to  the  worker.  So  long  as  the  owner  of  the  mine 
machinery,  simply  because  he  is  the  owner,  is 
able  to  take  a  share  of  the  product  of  the  mines, 
there  can  never  be  any  "full  product"  to  the 
workers.  The  term  "full  product"  of  labor  pre- 
supposes an  economic  system  under  which  income 
from  industry  goes  only  to  those  who  render  some 
active  service  to  the  community.  Such  a  situa- 
tion cannot  be  realized  until  there  is  a  very  com- 
plete social  ownership  of  all  of  the  natural  re- 
sources and  of  the  social  tools  of  production. 
This  would  mean,  in  the  anthracite  fields,  that 
the  community  would  own  and  operate  the  anthra- 
cite mines,  that  it  would  plan  to  pay  wages  equal 
to  what  each  man  produced,  and  that  all  forms  of 
social  value,  due  to  the  value  of  the  coal  in  the 
ground,  to  the  value  of  rights  of  way  and  the  like, 
would  go  into  the  common  treasury,  to  be  used 
for  the  building  of  roads  and  high  schools  for  the 
payment  of  accident  and  old  age  insurance,  for 
the  extension  of  public  work,  and  for  the  doing  of 
other  things  that  are  necessary  to  public  welfare. 

Any  such  program  obviously  requires  the  com- 
plete readjustment  of  some  of  the  most  funda- 
mental economic  relations.  At  the  same  time, 
many  of  the  workers  are  convinced  that  nothing 
except  a  fundamental  readjustment  will  success- 


THEFUTURE  235 

fully  bridge  over  the  chasm  of  economic  malad- 
justments that  appear  to  lie  on  all  sides  of  the 
present  order. 

The  facts  stated  in  the  chapter  on  the  wages  of 
the  anthracite  workers  made  it  clear  that  there 
were  reasons  why  the  workers  might  well  be  dis- 
satisfied with  the  present  economic  order  in  the 
anthracite  regions.  The  least  the  miners  can  hope 
for  is  a  powerful,  aggressive  union  that  shall  raise 
their  wages  to  a  level  of  living  decency  and  make 
them  reflect  the  risks  of  the  trade  and  the  increas- 
ing cost  of  living.  The  most  that  the  miners  can 
hope  for  is  a  complete  readjustment  of  the  eco- 
nomic situation  in  the  anthracite  fields  that  will 
make  the  whole  people  the  owners  of  the  field  and 
the  employers  of  the  miners,  and  that  will  give 
to  the  miners,  as  workers,  consumers  and  members 
of  society,  the  full  product  of  their  labor 

4.  The  Consumers  and  the  Future 

The  consimiers  are  the  great  majority  of  people 
at  interest  in  the.  anthracite  problem.  Under  the 
present  system  of  administration  of  the  coal 
mines  they  pay  the  full  cost  of  every  change  in 
the  expense  of  production,  in  the  wages  of  the 
workers  or  in  any  other  matter  affecting  the 
economic  aspect  of  the  anthracite  situation.  It 
is  as  if  the  operators  should  say  to  the  general 
public,  "We  will  be  glad  to  make  any  improve- 
ments that  you  suggest,  to  alter  our  wage  scale, 
increase  the  safety  of  our  mines,  reduce  the  amount 
of  child  labor,  modify  the  form  of  our  combina- 
tion and  take  such  other  steps  as  you  may  advise, 


236  ANTHRACITE 

but  you  will  readily  understand  that  we  cannot 
hope  to  do  these  things  without  incurring  addi- 
tional expense.  Since  our  profits  are  only  barely 
sufficient  now,  we  see  nothing  for  it  but  to  add  the 
cost  of  these  admittedly  necessary  improvements 
to  the  price  which  you  pay  for  your  coal." 

The  consumer  is  thus  brought  face  to  face  with 
the  monopoly  problem  which  was  discussed  in  the 
first  chapter.  The  operators  have  proved  them- 
selves sufficiently  powerful  to  add  to  the  price  of 
the  coal  the  increases  that  have  come  from  changes 
and  improvements,  and  in  addition  a  tidy  sum  in 
return  for  their  m.onopoly  advantage.  The  coal 
owners  charge  "all  that  the  traffic  will  bear." 
What  shall  the  consumers  do  to  secure  just  or 
"cost"  prices? 

It  is  obvious  that  the  consumers  are  powerless 
as  individuals.  Their  one  hope  lies  in  concerted 
action.  The  monopoHsts  of  any  needed  resource, 
under  the  present  system  of  property  ownership, 
are  able  to  force  their  will  as  against  any  one  per- 
son, or  as  against  any  group  of  persons,  unless 
they  are  powerfully  equipped  to  contend  in  the 
economic  arena. 

The  machinery  of  government  is  the  logical 
channel  through  which  the  consumers  may  express 
themselves.  They  are  the  body  of  the  people, 
and  the  government  of  a  democracy  is  a  govern- 
ment of  the  people.  The  consumers  are  organized 
in  the  most  pov/erful  organization  in  the  com- 
munity— the  government.  They  would  naturally 
employ  this  organization  in  their  efforts  to  secure 


THE     FUTURE  237 

justice  in  their  dealings  with  the  anthracite 
interests. 

There  are  really  only  two  ways  in  which  the 
consumer  may  express  himself  through  his  gov- 
ernment. First,  there  is  taxation;  second,  there 
is  state  ownership.  Some  people  still  insist  on  the 
possibilities  of  government  regulation,  but  a  quar- 
ter century  of  endeavor,  during  which  State  and 
Federal  governments  have  vied  with  one  another 
in  their  efforts  to  "regulate"  and  during  which 
together  with  many  other  natural  resource  monop- 
olists, the  anthracite  coal  owners  have  succeeded 
in  perfecting  a  monopoly  organization  that  gives 
them  virtual  control  of  the  price  of  their  product, 
has  convinced  many  of  the  most  ardent  advocates 
of  regulation  that  the  government  cannot  succeed, 
in  the  face  of  highly  organized  private  monopoly, 
in  working  out  a  successful  scheme  of  regulation. 

The  reason  for  the  failure  of  regulation  lies  in 
the  fact,  already  noted  in  the  discussion  of  the 
political  effects  of  monopoly,  that  the  industries 
that  are  subject  to  regulation  often  prove  to  be 
so  much  stronger  than  the  government  that  they 
can  make  and  modify  laws  and  direct  public  affairs 
in  their  own  interest.  Their  control  of  the 
resources  gives  them  a  source  from  which  to  draw 
the  huge  surplus  funds  that  are  needed  to  run  an 
organization  in  successful  opposition  to  the  estab- 
lished government.  The  best  proof  of  the  power 
of  these  great  industrial  combinations  is  their 
existence  after  a  quarter  century  of  endeavor  to 
overthrow  them. 


238  ANTHRACITE 

The  subject  may  be  attacked  from  a  different 
angle.  The  community  may  exercise  its  power 
through  taxation.  The  value  of  the  coal  in  the 
ground,  and  the  values  that  are  added  to  the  coal 
as  population  increases  and  demand  grows,  are 
social  values.  That  is,  they  are  created  by  the 
entire  community  and  are  not  in  any  sense  the 
result  of  the  activity  of  any  single  individual. 

A  tax  might  be  imposed  by  the  community  on 
the  anthracite  industry  that  would  absorb  the  full 
value  of  the  land — the  full  social  value — irrespect- 
ive of  the  improvements  that  have  been  made 
upon  it. 

The  taxation  method  is  simple.  It  is  direct. 
It  makes  use  of  governmental  machinery  already 
in  existence.  It  introduces  no  new  principle  and 
therefore  is  not  subject  to  the  objection  of  unwork- 
ableness.  All  of  the  arguments  in  favor  of  the 
possibilities  of  the  plan  are  adequate,  barring  this 
one  objection.  It  is  proposed  to  put  into  opera- 
tion a  system  that  will  prove  more  drastic  than 
any  form  of  regulation  ever  pretended  to  be, 
against  the  opposition  of  the  same  group  of  in- 
terests that  have  been  successful  in  thwarting 
previous  attempts  at  effective  regulation.  These 
interests  have  refused  in  the  past  to  permit  regu- 
lation. What  reason  is  there  for  supposing  that 
they  will  now  accept  the  operation  of  a  system  of 
taxation  that  will  do  practically  what  the  regtda- 
tive  measures  passed  heretofore  have  failed  to 
accomplish  ? 

Wherever  the  mine  laws,  health  laws,  child  labor 


THE     FUTURE  239 

laws  and  new  tax  laws  have  added  to  the  cost  of 
producing  coal,  the  operators  have  calmly  put 
these  additional  costs  in  the  column  under  ' '  Fixed 
Charges"  and  asked  the  consumer  to  foot  the  bill. 
What  reason  has  the  consumer  to  suppose  that  the 
same  thing  will  not  happen  in  the  case  of  the  tax 
on  social  values  ? 

The  logic  of  the  situation  seems  to  force  the 
conclusion  that  as  long  as  the  owners  of  the  anthra- 
cite fields  retain  their  present  monopoly  power, 
the  consumers  are  helpless  before  them.  There 
is,  then,  only  one  thing  for  the  consumers  to  do, 
and  that  is  to  eliminate  the  monopoly  power  of 
the  anthracite  interests,  which  lies  in  their  owner- 
ship of  a  natural  resource. 

The  consumers  have  their  government  founded 
on  the  idea  of  political  democracy.  Side  by  side 
with  this  political  democracy,  dominating  its 
activities  in  some  directions,  threatening  its  very 
existence  in  others,  is  the  monopoly  organiza- 
tion of  coal  interests.  This  organization  is  in 
many  respects  stronger  than  the  government 
itself.  Through  its  monopoly  power  it  exercises 
such  governmental  functions  as  that  of  taxation. 
The  organization  secures  laws  and  interprets 
them.  It  is  a  form  of  government  existing  at  the 
same  time  and  place  as  the  political  government 
which  the  citizens  of  the  United  States  for  a  long 
time  believed  to  be  the  only  government  in  the 
land. 

A  house  divided  against  itself  cannot  stand. 
Two  equally  powerful  governments  cannot  exist 


240  ANTHRACITE 

at  the  same  time  in  the  same  jurisdiction.  One  or 
the  other  is  bound  to  assume  a  position  of  domi- 
nance. 

The  consumers  of  the  United  States  must 
choose  between  the  two  governments  in  the 
anthracite  industry.  If  they  favor  monopoly 
profits,  they  should  decide  in  favor  of  the  anthra- 
cite interests.  If,  on  the  other  hand,  they  believe 
that  the  democratic  principles  that  underly  the 
American  system  of  political  government  are  still 
valid,  and  still  applicable  to  the  affairs  of  the 
people,  then  the  people  themselves  must  under- 
take the  management  of  this  and  of  every  other 
enterprise  whose  existence  threatens  the  continu- 
ance of  a  government  by  the  people. 

The  workers  in  the  anthracite  regions  are  in  a 
position  where  they  can  endure  the  present  eco- 
nomic system  if  they  are  able  to  maintain  a  suffi- 
ciently powerful  union.  To  the  consumer,  the 
continuance  of  the  present  economic  system  in 
the  anthracite  fields  means  not  only  the  financial 
burden  of  monopoly  profits,  but  a  far  more  oner- 
ous burden  in  the  form  of  an  attack  on  the  very 
foimdations  of  the  established  political  govern- 
ment, which  the  consumers  regard,  and  rightly  so, 
as  their  one  source  of  protection  and  power. 

The  interests  of  the  consumer  clearly  demand 
that  the  community,  acting  through  the  state  or 
the  national  government,  shall  take  possession  of 
the  anthracite  coal  fields,  operate  them  in  the 
interests  of  the  community  and  sell  the  people  coal 
at  cost.     Many  recent  precedents  for  this  action 


THEFUTURE  241 

exist.  The  government  has  developed  irrigation 
projects  and  sold  them  to  the  people  at  cost;  in 
its  largest  single  venture  it  is  developing  trans- 
portation in  the  Panama  Canal  and  selling  it  to 
the  people  at  cost.  The  time  seems  to  have  come 
when  the  public  interest  demands  that  the  govern- 
ment shall  take  over  the  anthracite  coal  fields  and 
sell  anthracite  to  the  American  people  at  cost. 

6.  Winners  and  Losers 

A  continuance  of  the  present  system  of  owner- 
ship in  the  anthracite  fields  will  benefit  the  oper- 
ators alone.  They  are  the  ones  primarily  inter- 
ested in  the  maintenance  of  things  as  they  are. 
The  workers  and  the  consumers,  making  up  the 
vast  majority  of  those  who  are  interested  in  the 
anthracite  problem,  will  benefit  only  through 
some  change  in  the  present  system.  The  change 
which  seems  most  likely  to  benefit  both  workers 
and  consumers  is  an  economic  reorganization  that 
will  make  the  community  the  owner  and  director 
of  the  anthracite  field  and  of  its  administration. 


END 


16 


APPENDIX 


SHIPMENTS  OF  ANTHRACITE  BY   SIZES,  LONG 
TONS,    1890  TO   1913 


Sizes  Above  Pea 

Sizes — Pea  and  Smaller 

Total 

Quantity 

Per  Cent 

Quantity 

Per  Cent 

Shipment 

1890 

28,154,678 

76.9 

8,460,781 

23.1 

36,615,459 

1891 

30,604,566 

75.7 

9,843,770 

24.3 

40,448,336 

1892 

31,868,278 

76.0 

10,025,042 

24.0 

41,893,320 

1893 

32,294,233 

74.9 

10,795,304 

25.1 

43,089,537 

1894 

30,482,203 

73.7 

10,908,997 

26.3 

41,391,200 

1895 

32,469,367 

69.9 

14,042,110 

30.1 

46,511,477 

1896 

30,354,797 

70.3 

12,822,688 

29.7 

43,177,485 

1897 

28,510,370 

68.5 

13,127,494 

31.5 

41,637,864 

1898 

28,198,532 

67.3 

13,701,219 

32.7 

41,899,751 

1899 

31,506,700 

66.1 

16,158,504 

33.9 

47,665,204 

1900 

29,162,459 

64.7 

15,945,025 

35.3 

45,107,484 

1901 

34,412,974 

64.2 

19,155,627 

35.8 

53,568,601 

1902 

19,025,632 

61.0 

12,175,258 

39.0 

31,200,890 

1903 

37,738,510 

63.6 

21,624,321 

36.4 

59,362,831 

1904 

35,636,661 

62.0 

21,855,861 

38.0 

57,492,522 

1905 

37,425,217 

60.9 

23,984,984 

39.1 

61,410,201 

1906 

32,894,124 

59.1 

22,804,471 

40.9 

55,698,595 

1907 

39,332,855 

58.6 

27,776,538 

41.4 

67,109,393 

1908 

38,319,325 

59.3 

26,345,689 

40.7 

64,665,014 

1909 

36,437,762 

58.1* 

26,250,597 

41.9* 

62,688,359 

1910 

38,415,323 

58.5* 

27,297,438 

41.5* 

65,712,761 

1911 

41,728,071 

59.2* 

28,696,126 

40.8* 

70,424,197 

1912 

39,538,583 

60.6* 

25,662,670 

39.4* 

65,201,253 

1913* 

43,934,919 

61.6* 

27,360,797 

38.4* 

71,295,716 

■ — Mineral  Resources  of  the  United  States, 

1913,  Part  II,  p.  889. 

*  Exclusive  of  coal  recovered  by  river  dredges. 


(243) 


244  APPENDIX 

EMPLOYEES,  WORKING  TIME   AND   TONNAGE 
1890   TO    1913 


Men 
Employed 

Days 
Worked 

A  verage 
Tonnage  Per 
Man  Per  Day 

A  verage 

Tonnage  Per 

Man  Per  Year 

1890 

126,000 

200 

1.85 

369 

1891 

126,350 

203 

1.98 

401 

1892 

129,050 

198 

2.06 

407 

1893 

132,944 

197 

2.06 

406 

1894 

131,603 

190 

2.08 

395 

1895 

142,917 

196 

2.07 

406 

1896 

148,991 

174 

2.10 

365 

1897 

149,884 

150 

2.34 

351 

1898 

145,504 

152 

2.41 

367 

1899 

139,608 

173 

2.50 

433 

1900 

144,206 

166 

2.40 

398 

1901 

145,309 

196 

2.37 

464 

1902 

148,141 

116 

2.40 

279 

1903 

150,483 

206 

2.41 

496 

1904 

155,861 

200 

2.35 

469 

1905 

165,406 

215 

2.18 

47» 

1906 

162,355 

195 

2.25 

439 

1907 

167,234 

220 

2.33 

512 

1908 

174,174 

200 

2.39 

478 

1909 

1205] 

1910 

169,497 

229 

2.17 

498 

1911 

172,585 

246 

2.13 

524 

1912 

174,030 

231 

2.10 

485 

1913 

175,745 

257 

2.02 

52» 

— Mineral  Resources  of  the  United  States,  1913,  Part  II,  p.  753. 


INDEX 


Accidents,  anthracite,  104 

Accidents,  anthracite  and  rail- 
roading, 105 

American  standard  of  living, 
144 

Anthracite  and  monopoly,  21 

Anthracite  and  the  govern- 
ment, 221 

Anthracite  bookkeeping  and 
wages,  130 

Anthracite  carriers  and  govern- 
ment authority,  222 

Anthracite  carriers,  dividends 
paid  by,  168,  197 

Anthracite  carriers,  profits  of, 
in  recent  years,  171 

Anthracite  carriers,  stock  rat- 
ings of,  169 

Anthracite  combination,  activ- 
ities of,  158 

Anthracite  combination  and 
prices,  93 

Anthracite  combination  and 
railroad  unity,  58 

Anthracite  combination,  com- 
munity of  interest  estab- 
lished, 59 

Anthracite  combination,  data 
on,  50 

Anthracite  combination,  elimi- 
nation of  independent  opera- 
tors, 60 

Anthracite  combination,  ex- 
tent of,  49 

Anthracite  combination  in 
early  years,  50 

Anthracite  combination  in 
1873,  51 

Anthracite  combination  in 
1876,  51 

Anthracite  combination,  inter- 
locking directorates  and,  60 


Anthracite  combination,  net 
results  of,  196 

Anthracite  combination,  organ- 
ization of,  55 

Anthracite  combination,  power 
of,  64 

Anthracite  combination,  rea- 
sons for,  54 

Anthracite  combination,  rea- 
sons for  organizing,  56 

Anthracite  combination,  recent 
developments  of,  55 

Anthracite  combination,  re- 
sults of,  159 

Anthracite  combination  since 
1898,  54 

Anthracite  combination,  suc- 
cess of,  157 

Anchracite  combination,  use 
of  Lehigh  Valhy  in,  58 

Anthracite  consumers,  obliga- 
tions of,  84 

Anthracite  consumers,  rights 
of,  84 

Anthracite,  cost  of  marketing, 
92 

Anthracite,  cost  of  producing, 
87 

Anthracite,  cost  of  producing, 
illustration,  88 

Anthracite,  cost  of  production, 
specific  items  in,  88 

Anthracite  costs,  distribution 
of,  91 

Anthracite  dividends,  160 

Anthracite  earnings,  167 

Anthracite,  extent  of  consump- 
tion, 45 

Anthracite  freight  rates,  164 

Anthracite,  imoortance  of,  144 

Anthracite,  importance  of,  to 
consumers,  66 


(245) 


246 


INDEX 


Anthracite  industry,  relation 
to  consumers,  46 

Anthracite  interests,  conflict 
of,  227 

Anthracite  labor,  conditions 
surrounding,  107 

Anthracite  labor,  economic 
status  of,  97 

Anthracite  labor,  risks  of,  103 

Anthracite  monopoly,  basis 
for,  21 

Anthracite  monopoly,  basis  of, 
49 

Anthracite  monopoly,  char- 
acter of,  49 

Anthracite  monopoly,  larger 
results  of,  201 

Anthracite,  monopoly  lesson 
of,  196 

Anthracite  owners,  status  of, 
230 

Anthracite  prices  and  the  con- 
sumer, 197 

Anthracite  prices,  recent  move- 
ments of,  85 

Anthracite  problem,  charac- 
teristics of,  43 

Anthracite  problem,  parties  to, 
42 

Anthracite  problem,  statement 
of,  42 

Anthracite  problem,  summary 
of,  63 

Anthracite,  production  of,  44 

Anthracite  production,  restric- 
tion of,  52 

Anthracite  profits,  153 

Anthracite  profits  and  land 
values,  173 

Anthracite  profits  and  railroad 

•-  profits,  161 

Anthracite  profits,  basis  for 
determining  reasonableness 
of,  171 

Anthracite  profits,  increase  of, 
156 

Anthracite  profits  in  recent 
years,  161 


Anthracite'profits,  measure  of, 

170 
Anthracite  profits,  reasonable 

basis  for,  177 
Anthracite  prosperity,  160 
Anthracite,  relative  prices  of, 

since  1890,  86 
Anthracite  transportation,  pro- 
fits from,  156 
Anthracite  supply,  duration  of, 

48 
Anthracite,  supply  of,  46 
Anthracite,  use  of,  43 
Anthracite  wage,  business  as- 
pects of,  128 
Anthracite   wage,   inadequacy 

of,  137 
Anthracite  wages  and  income, 

135 
Anthracite   wages   and   living 

decency,  27 
Anthracite  wages  and  railroad 

wages,  106 
Anthracite  wages  and  physical 

efficiency,  118 
Anthracite  wages  and  the  cost 

of  living,  141 
Anthracite  wages  and  the  labor 

market,  110 
Anthracite  wage  scale,  115 
Anthracite  wages,  increase  of, 

145 
Anthracite  wage,  social  objec- 
tions to,  137 
Anthracite  workers,   demands 

of,  232 
Anthracite  workers,  status  of, 

231 
Anthracite  workers,  wage  rates 

of,  197 
Anti-trust  agitation,  24 
Average  annual  earnings  and 

real  wages,  151 
Average    earnings,    anthracite 

labor,  101 
Average  earnings,  bituminous 

miners,  102 


INDEX 


247 


Business  for  profits,  76 
Business  for  service,  79 
Business  practice  and  anthra- 
cite wages,  129 

Capital  and  investment  re- 
turns, 77 

Capitalization,  methods  of,  78 

City  land  values  and  monop- 
oly, 20 

Classified  earnings,  anthracite, 
116 

Co-operation,  growth  of,  156 

Co-operation,  growth  of,  in 
business,  26 

Combination  and  monopoly 
profits,  18 

Combination  and  the  con- 
sumer, 27 

Combination,  development  of, 
27 

Combination,  effect  on  prices, 
53 

Combination,  effects  of,  on 
prices,  18 

Combination,  reasons  for,  26 

Competition  and  business  ex- 
perience, 25 

Competition  and  cost  prices, 
17 

Competition  and  group  con- 
sciousness, 154 

Competition  and  prices,  26 

Competition  and  the  con- 
sumer, 26 

Competition  as  the  life  of 
trade,  24 

Competition,  danger  of  an- 
thracite, 57 

Competition,  dangers  of,  26 

Competition,  decrease  of,  27 

Competition,  disasters  of,  26 

Competition,  historic  basis  of, 
25 

Competition,  lessons  of,  in  the 
anthracite  field,  54 

Competitive  price  level,  28 

Consumer  and  low  prices,  74 


Consumer  and  production,  67 
Consumer,  obligations  of,  70 
Consumer,    position   of,  1912, 

184 
Consumer,   responsibilities  of, 

68 
Consumer,  rights  of,  69 
Consumer,  status  of,  66,  235 
Consumer,  viewpoint  of,|65 
Consumers  and  competition,  26 
Consumers  and  the  burden  of 

monopoly,  199 
Consumers,  demands  of,  236 
Consumers,   increased   burden 

on,  1912,  187 
Consuming.'public  and  individ- 
ual consumers,  65 
Consuming  public,  rights  of,  65 
Cost  of  living  and  anthracite 

wages,  141 
Cost  of  living,  increase  in,  142 
Cost  of  living,  scope  of,  142 
Cost  of  marketing  anthracite, 

92 
Cost  of  producing  anthracite, 

87 
Cost  price,  meaning  of,  17 
Cost     prices     and      physical 

assets,  28 

Democracy  and  special  privi- 
lege, 220 

Democracy,  basic  principles  of, 
228 

Distribution,  ownership  as  an 
element  in,  23 

Dividends,  anthracite,  169 

Dividend  rates,  anthracite,  97 

Earning  power  and  prices,  82 

Earnings  of  anthracite  miners, 
145 

Economic  conflict  and  anthra- 
cite, 42 

Employment,  extent  of,  190 

Fair  anthracite  wages,  152 
Fair  prices  for  anthracite,  94 


248 


INDEX 


Family  expenditures,  120 
Food  costs,  121 
Free  land  and  monopoly,  36 
Freight  rates,  anthracite,  164 
Freight   rates   and   anthracite 
profits,  162 

Government  and  anthracite, 
221 

Government  regulation,  rea- 
sons for  failure  of,  237 

Group  consciousness,  lack  of, 
154 

Income  and  anthracite  wages, 
136 

Income  from  work  and  owner- 
ship, 211 

Incentive  and  private  property, 
40 

Independent  operators,  con- 
trol of,  through  contracts,  62 

Independent  operators,  elimi- 
nation of,  60 

Index  of  real  wages,  151 

Inequality,  effects  of  monopoly 
on,  208 

Labor,  anthracite,  status  of,  97 

Labor  cost  and  prices,  1 79 

Labor  costs,  anthracite,  88 

Labor  costs,  increase  of,  and 
increased  prices,  180 

Labor  market  and  anthracite 
wages,  110 

Labor  market  and  social  obli- 
gations, 140 

Lackawanna  Railroad,  operat- 
ing statistics  for,  131 

Land  and  production  costs,  20 

Land  monopoly,  illustration  of, 
20 

Land,  monopoly  of,  19 

Land  ownership  as  monopoly, 
19 

Land  problem  and  monopoly, 
20 

Land,  social  character  of,  33 


Land  values  and  anthracite 
profits,  174 

Land  value  increase,  instances 
of,  35 

Lehigh  and  Wilkes-Barre  Coal 
Co.,  statement  of  operations, 
130 

Lehigh  VaUey  Railroad,  operat- 
ing statistics  of,  133 

Living  on  income,  213 

Living  wage,  elements  in,  119 

Living  wage  for  anthracite 
workers,  125 

Living  wage,  meaning  of,  114 

Monopoly  and  anthracite,  21 
Monopoly  and  inequality,  208 
Monopoly    and    land    owner- 
ship, 19,  20 
Monopoly  and  resource  owner- 
ship, 205 
Monopoly  and   special   privi- 
lege, 19 
Monopoly    and    work    oppor- 
tunities, 202 
Monopoly,   as   taxing   power, 

216 
Monopoly,     control    of,    over 

Uvelihood,  209 
Monopoly,  dangers  of,  224 
Monopoly,  definition  of,  17 
Monopoly,  economic  effects  of, 

201 
Monopoly,  example  of,  17 
Monopoly,  failure  of  225 
Monopoly,  general  aspects  of, 

201 
Monopoly,  larger  menace  of, 

200 
Monopoly,  measure  of  results 

from,  41 
Monopoly  and  monopoly  price, 

76 
Monopoly,  nature  of,  17 
Monopoly,  not  final,  4 1 
Monopoly  of  resources,  power 

through,  19 
Monopoly,  political  effects,  216 


INDEX 


249 


Monopoly  power,  19 
Monopoly  power  and  increased 

prices,  185 
Monopoly  power,  character  of, 

17 
Monopoly,  power  of,  over  the 

worker,  203 
Monopol/  price,  content  of,  1 8 
Monopolr  price,  example  of, 

75,  18  = 
Monopol/  price,  fixing  of,  75 
Monopoly  price,  principle  of, 

75 
Monopoly    principle    and    an- 
thracite, 84 
Monopoly  profits,  basis  for,  18 
Monopoly  profits,  redefined,  28 
Monopoly,  social  effects  of,  207 
Monopoly,  sources  of,  17 
Monopoly,  success  of,  38 
Monopoly  taxes  and  anthra- 
cite, 219 
Monopoly,  test  of,  29 
Monopoly,  use  of  surplus  labor 

in,  204 
Monopoly,  will  it  work?  29 

Natural  resource  control,  basis 

for,  229 
Natural     resource     monopoly 

and  private  capital,  43 
Natural     resource     monopoly 

and  public  controversy,  43 
Natural     resource     monopoly 

and  public  welfare,  64 

Operators,  advantage  of,  178 
Operators,  gains  of,  190 
Opportunity    and      American 

Hfe,  31  _ 
Opportunity,  denial  of,  through 

monopoly,  214 
Opportunity    through    owner- 
ship, 31 
Ownership  and  distribution,  23 
Ownership,  arguments  in  favor 

of,  32 
Ownership  and  income,  205 


Ownership  and  opportunity,  3 1 

Ownership  and  private  mono- 
poly, 34 

Ownership  and  property  in- 
come, 212 

Ownership  concentration  and 
monopoly,  23 

Ownership,  concentration  of, 
and  monopoly,  38 

Ownership,  results  of,  34 

Percentage  contracts,  control 
of  operators  through,  62 

Physical  efficiency  and  anthra- 
cite wages,  118,  127 

Physical  valuation,  and  reason- 
able prices,  83 

Price  increase  and  labor  cost, 
181 

Price  increase,  1912,  reasons 
alleged  for,  192 

Price  increases,  1912,  183 

Price  increases,  reasons  as- 
signed for,  183 

Price  making,  methods  of,  74 

Prices  and  earning  power,  82 

Prices  and  profits,  77,  179 

Prices  and  physical  valua- 
tion, 83 

Prices,  anthracite  increase  in, 
85 

Prices,  effect  of  combination 
on,  53 

Private  ownership  in  natural 
resources,  33 

Private  property  and  oppor- 
tunity, 40 

Private  property  an  incentive, 
40 

Private  property,  logic  of,  39 

Private  property,  test  of,  36 

Production  costs  and  increased 
prices,  193 

Production  costs,  anthracite, 
192 

Production  of  anthracite,  44 

Purchasing  power,  over  an- 
thracite, 197 


250 


INDEX 


Profits  and  prices,  77,  179 
Profits   and   the    1912   agree- 
ment, 191 
Profits,  extent  of,  199 
Profits  in  anthracite,  153 
Profits,  increase  of,  156 
Property  and  service  income, 
210 

Railroad  earnings,  anthracite 

carriers,  167 
Railroad  profits  and  anthracite 

profits,  161 
Railroad  unity  and  anthracite 

combination,  58 
Reading  interests  and  anthra- 
!■*(  cite  combination,  52 
Reading  interests,  organization 

of,  53 
Real  wages,  anthracite,  148 
Reasonable  prices,  72 
Reasonable    prices,    consumer 

and,  73 
Reasonable    prices,    definition 

of,  73 
Reasonable  prices,  measure  of, 

73 
Reasonable  profits,  basis  for, 

78,  171 
Resource  monopoly,  complete- 
ness of,  21 
Resource  monopoly,  economic 

power  of,  207 
Resource    monopoly,    success 

of,  38 
Resource  ownership,  arguments 

for,  32 
Resources  and  monopoly,  19 
Resources,    private   monopoly 

of,  31 
Risks  of  anthracite  labor,  103 

Service  and  the  business  view- 
point, 80 
Sliding  scale,  results  from,  182 
SmaU  profits,  era  of,  153 
Social   institutions  and   social 
values,  37 


Social  success,  measure  of,  41 
Special  privilege  and  American 

government,  220 
Special    privilege  and  monop- 
oly, 19 
Special  privilege,  dan2;er  of,  to 

democracy,  220 
Special  privilege,  taxing  power 

of,  219 
Standard  of  living,  121 
Standard  of  living,  cost  of,  122 
Standard  of  hving,  cost  of,  for 

anthracite  worken,  124 
Strike  of   1912,  lessons  from, 

194 
Strike  of  1912,  results  of,  178 
Surplus   labor  and  monopoly 

power,  294 

Taxation,  possibilities  of,  238 
Taxing  power  and  monopoly, 

216 
taxing  power,  growth  of,  217 
Temple    Iron    Company    and 
anthracite  combinstion,  60 
Trade,  advantages  of  competi- 
tion in,  24 
Trusts,  public  attitude  toward, 
24 

Unmined  anthracite,  47 

Wage  adequacy,  measure  of, 

113 
Wage  adequacy,  phases  of,  118 
Wage  agreement,  1912,  182 
Wage    contract     and     social 

ethics,  139 
Wage  increase  and    increased 

prices,  179 
Wage  increase,  anthracite,  146 
Wage  increase  1912,  extent  of, 

189 
Wage   rates,  anthracite  labor, 

100 
Wage  rates  in  recent  years,  197 
Wage  scale,  anthracite,  115 


INDEX 


251 


Wages  and  the  labor  market, 

HI 
Wages   and   the    1912   agree- 
k    ment,  188 
Wages,   anthracite,   adequacy 

of,  112 
Wages,  anthracite,  and  other 

industries,  107 
Wages    anthracite,  and    other 

mine  wages,  99 
Wages,  anthracite  labor,  99 
Wages,    anthracite,    recent 

changes  in,  117 
Wages,  basis  for  determining, 

139 
Wages,  increase  in,  178 


Wages  must  support  faroilies, 
140 

Wages,  Pennsylvania  coal 
mines,  101 

Workers  and  owners,  2 1 1 

Workers,  anthracite,  possibili- 
ties for,  98 

Workers,  benefits  of  monop- 
oly to,  200 

Workers,  future  status  of,  132 

Workers,  status  of,  1912,  188 

Yearly  earnings,  anthracite 
and  other  industries,  108 

Yearly  earnings,  anthraxrite 
miners,  101 


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and  withal  the  gift  of  spontaneous  and  haunting  music.  The 
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time  and  again.     ...     A  remarkable  book." 

128  pages.        12mo.        Cloth;  gilt  top.        $1.00  Net 
THE  JOHN  C.  WINSTON  COMPANY 

PUBLISHERS  -  PHILADELPHU 


IMPORTANT  WINSTON  PUBLICATIONS 

WINSTON'S 
CUMULATIVE     ENCYCLOPEDIA 

Is  Kept  Constantly  Up-to-Date 

Winston's  Cumulative  Encyclopedia  is  a  comprehensive 
encyclopedia  that  is  kept  constantly  up-to-date  by  means  of 
annual  additions  of  new  material  inserted  in  its  proper  place  in 
the  printed  books,  without  bother  or  expense,  without  having  to 
send  the  books  back,  without  loosening  the  printed  pages  or 
affecting  the  binding  or  shape  of  the  books.  Protected  by  three 
new  patents — always  up-to-date — always  records  the  latest 
information  on  every  important  topic — is  always  newer  than  the 
newest  work  published  because  it  can  be  kept  up-to-date  more 
easily  than  a  new  work  can  be  printed. 

nils  EVERY  REQUIREMENT  OF  A  COMPLETE  WORK 
OF  REFERENCE 

Winston's  Cumulative  Encyclopedia  is  planned  to  include 
the  material  facts  on  all  subjects  covering  the  whole  ra  ^e  of 
human  knowledge — giving  exactly  what  everyone  we  to 
know  on  every  encyclopedic  topic.     It  has  been  special  e- 

pared  for  busy,  practical  men  and  women  and  for  childr  ho 
require  supplemental  aid  in  their  studies,  and  has  been  a^  .ed 
by  the  city  schools  of  Boston  and  leading  educational  institu- 
tions all  over  the  country.  More  usable  than  higher- oriced 
works  of  reference. 

Expert  editors  have  put  all  the  needed  facts  and  dafc  n  the 
least  possible  compass,  without  sacrificing  clearness  or  co.  )1ete- 
ness,  giving  in  ten  volumes  (each  65  x  9  x  If  ins.)  a  w  -h  of 
information  that  ordinarily  would  run  into  twenty  or  thi-  ,  vol- 
umes— with  a  corresponding  saving  in  cost.  Think  of  it !  Ten 
brimful  voltunes  for  only  a  few  cents  a  day,  in  easy  monthly 
payments. 

5,600  pages,  40,000  subjects,  2,750  illustrations  ;olored 
plates  and  maps.    Complete  in  ten  volumes. 

Specimen  pages,  description  of  the  cumulative  ;ystem, 
details  of  bindings,  and  prices  will  be  furnished  on  req^    st. 

THE  JOHN  C.  WINSTON  COMPiJVY 

PUBLISHERS  -  PHILADl    PHU 


UNIVERSITY  OF  CALIFORNIA,  LOS  ANGELES 
THE  UNIVERSITY  LIBRARY 

This  book  is  DUE  on  the  last  date  stamped  below 


MIM1  61949 
51  y 


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MAY  5  m&i 


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APR  12 


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rv/  E  D 


DESK 


1955 


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Form  L-9 
23ni-2, '13(3205) 


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UNIVBRSITY  OF  CALIFORNIA 

AT 

LOS  ANGELES 

LIBRARY 


3  1158  00922  8254 
'/ 


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